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Labor Unions and Forms of Corporate Liquidity

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  • Zhenxu Tong

Abstract

We examine how the presence of labor unions affects a firm's choice of corporate liquidity between bank lines of credit and corporate cash holdings. We find that firms in industries with higher unionization rates hold a higher fraction of corporate liquidity in the form of bank lines of credit. We divide the firms into sub-groups and find that this positive relationship holds for firms that are not in a state with right-to-work legislation and for firms that are financially constrained. Our findings are consistent with the hypothesis that a firm chooses the forms of corporate liquidity to take advantage of the bargaining benefits associated with bank lines of credit.

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  • Zhenxu Tong, 2015. "Labor Unions and Forms of Corporate Liquidity," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 42(7-8), pages 1007-1039, September.
    • Handle: RePEc:bla:jbfnac:v:42:y:2015:i:7-8:p:1007-1039
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    References listed on IDEAS

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    2. Jiang, Xiandeng & Yang, Jin & Yang, Wei & Zhang, Jian, 2021. "Do employees’ voices matter? Unionization and corporate environmental responsibility," International Review of Economics & Finance, Elsevier, vol. 76(C), pages 1265-1281.
    3. Özgür Arslan‐Ayaydin & James Thewissen & Wouter Torsin, 2021. "Disclosure tone management and labor unions," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 48(1-2), pages 102-147, January.

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