Organized Labor and Inventory Stockpiling

• 成果类型: Article
• 署名作者: Hamm, Sophia J. W.; Jung, Boochun; Lee, Woo-Jong; Yang, Daniel G.
• 署名单位: Tulane University; University of Hawaii System; University of Hawaii Manoa; Seoul National University (SNU); University System of Ohio; Ohio State University
• 刊物名称: ACCOUNTING REVIEW
• ISSN/ISSBN: 0001-4826
• DOI: 10.2308/TAR-2018-0117
• 发表日期: 2022
• 页码: 241-266
• 关键词: to-work laws; earnings management; real activities; institutional investors; Fundamental analysis; unions; INFORMATION; INVESTMENT; IMPACT; debt

摘要

We document that managers stockpile excess inventory to mitigate the operational risk posed by labor unions and to maintain bargaining power in labor negotiations. Inventory levels are higher for union firms and are incrementally higher preceding the renegotiation of collective bargaining agreements with unions. Inventory stockpiling at union firms is more salient when capital market pressure for transparency or information spillover from peers constrains managers from using disclosure strategies. We further show that managers weigh the costs and benefits of inventory stockpiling, as holding excess inventory due to the presence of a union is negatively associated with future profitability, but provides the benefits of avoiding a stockout and mitigating negative outcomes from a strike. Our findings highlight the importance of a major stakeholder, i.e., labor, in managers' investment decision making.