Organized Labor and Debt Contracting: Firm-Level Evidence from Collective Bargaining

• 成果类型: Article
• 署名作者: Cheng, Lin
• 署名单位: University of Arizona
• 刊物名称: ACCOUNTING REVIEW
• ISSN/ISSBN: 0001-4826
• DOI: 10.2308/accr-51566
• 发表日期: 2017
• 页码: 57-85
• 关键词: Information asymmetry; FINANCING DECISIONS; corporate governance; earnings management; disclosure; unionization; profitability; INVESTMENT; CHOICE; POLICY

摘要

This paper employs a firm-level collective bargaining dataset to investigate the effect of labor, as an important stakeholder of a firm, on debt contracting. I conjecture and provide evidence that firms with strong organized labor prefer bank loans to public bonds because, by communicating with banks privately, unionized firms can reduce the adverse selection costs while preserving the information asymmetry with organized labor. Furthermore, I show that organized labor influences the structure of syndicated loans. When firms with strong unions withhold public disclosures, but communicate privately with lead lenders, heightened information asymmetry between the lead lenders and the participant lenders induces the lead lenders to retain larger shares of the loans and form more concentrated syndicates. Overall, this study demonstrates that the proprietary costs of disclosure related to organized labor significantly influence firms' debt contracting decisions and outcomes.