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Labor Unions And Corporate Cash Holdings: Evidence From International Data

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  • Zhenxu Tong
  • Hui Huang

Abstract

Firms in countries with higher union membership have less corporate cash holdings. This negative relation is stronger for firms in countries with weak employment protection legislation, firms in countries with a high degree of labor bargaining centralization, and financially constrained firms. Moreover, the market value of corporate cash holdings is lower for firms in countries with high union membership. The number of strikes and lockouts is higher in countries with more corporate cash holdings. We conclude that firms strategically choose corporate cash holdings to gain a bargaining position with labor in an international setting.

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  • Zhenxu Tong & Hui Huang, 2018. "Labor Unions And Corporate Cash Holdings: Evidence From International Data," Journal of Financial Research, Southern Finance Association;Southwestern Finance Association, vol. 41(3), pages 325-350, September.
    • Handle: RePEc:bla:jfnres:v:41:y:2018:i:3:p:325-350
    DOI: 10.1111/jfir.12152
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    Cited by:

    1. Marwick, Alex & Hasan, Mostafa Monzur & Luo, Tianpei, 2020. "Organization capital and corporate cash holdings," International Review of Financial Analysis, Elsevier, vol. 68(C).
    2. Gupta, C.P. & Bedi, Prateek, 2020. "Corporate cash holdings and promoter ownership," Emerging Markets Review, Elsevier, vol. 44(C).
    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.
    4. Clarkson, Peter & Gao, Ru & Herbohn, Kathleen, 2020. "The relationship between a firm’s information environment and its cash holding decision," Journal of Contemporary Accounting and Economics, Elsevier, vol. 16(2).

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