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Do Managers Withhold Good News from Labor Unions?

Author

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  • Richard Chung

    (Griffith Business School, Griffith University, Nathan QLD 4111, Australia)

  • Bryan Byung-Hee Lee

    (Faculty of Business Administration, University of Macau, Taipa, Macau, China)

  • Woo-Jong Lee

    (College of Business Administration, Seoul National University, Seoul, Republic of Korea)

  • Byungcherl Charlie Sohn

    (Faculty of Business Administration, University of Macau, Taipa, Macau, China)

Abstract

With scarce empirical support, prior literature argues that managers tend to withhold good news and promote bad news to preserve their bargaining power against labor unions. This paper provides empirical evidence of this rarely supported argument. Using comprehensive firm-level data from South Korea, where labor unions have a long tradition of making credible threats, we find that overall disclosure frequency is negatively related to labor union strength, and that this relation is more pronounced in firms with good news. We also find that firms with strong labor unions withhold good news during the labor negotiation period and release it in a gradual fashion afterward and that this pattern is more prominent than that of firms with weak or no unions, implying that managers time news disclosures according to bargaining schedules to achieve better outcomes in labor negotiations. These results are robust to various sensitivity tests.Data, as supplemental material, are available at http://dx.doi.org/10.1287/mnsc.2014.2075 . This paper was accepted by Mary Barth, accounting .

Suggested Citation

  • Richard Chung & Bryan Byung-Hee Lee & Woo-Jong Lee & Byungcherl Charlie Sohn, 2016. "Do Managers Withhold Good News from Labor Unions?," Management Science, INFORMS, vol. 62(1), pages 46-68, January.
    • Handle: RePEc:inm:ormnsc:v:62:y:2016:i:1:p:46-68
    DOI: 10.1287/mnsc.2014.2075
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    References listed on IDEAS

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