Union Contracts and the Firm's Financial Structure
This paper examines the effects of union contracts on the firm’s capital structure. We consider one-stage and two-stage models, as well as wage and wage/employment contracts. We show that, for all Pareto efficient bargaining solutions, a higher debt reduces the expected tax bill, but increases the expected cost of labour contracts. This trade-off determines the optimal capital structure. We also show that a stronger union tends to increase the amount of equity used.
|Date of creation:||Jul 2002|
|Contact details of provider:|| Postal: 4700 Keele Street, Toronto, Ontario, M3J 1P3|
Phone: (416) 736-5083
Fax: (416) 736-5987
Web page: http://dept.econ.yorku.ca/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Appelbaum, Elie, 1992.
"Bankruptcy, Warranties and the Firm's Capital Structure,"
International Economic Review,
Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 33(2), pages 399-412, May.
- Appelbaum, E., 1989. "Bankruptcy, Warranties And The Firm'S Capital Structure," Papers 89-09, York (Canada) - Department of Economics.
- Appelbaum, Elie & Katz, Eliakim, 1986. "Measures of Risk Aversion and Comparative Statics of Industry Equilibrium," American Economic Review, American Economic Association, vol. 76(3), pages 524-529, June.
- Appelbaum, Elie, 1993. "Government policy and the firm's capital structure," European Economic Review, Elsevier, vol. 37(6), pages 1185-1196, August.
- Brander, James A & Spencer, Barbara J, 1989. "Moral Hazard and Limited Liability: Implications for the Theory of the Firm," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 30(4), pages 833-849, November.
- E. Appelbaum & E. Katz, 1987. "Asymmetric Taxation and the Theory of the Competitive Firm under Uncertainty," Canadian Journal of Economics, Canadian Economics Association, vol. 20(2), pages 357-369, May. Full references (including those not matched with items on IDEAS)