Ghaly, Mohamed and Kostakis, Alexandros and Stathopoulos, Konstantinos (2021) The (non-) effect of labor unionization on firm risk:Evidence from the options market. Journal of Corporate Finance, 66. ISSN 0929-1199
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Abstract
Labor unionization has no causal effect on firm risk. Using a regression discontinuity design to study the impact of labor union elections on option-implied firm risk, we find that unionization per se does not affect investor perceptions about firm price, tail, or variance risk. This finding is robust to studying very short (5-trading day) and long (up to 2-year) windows around the elections. Moreover, there is no unionization effect on firm risk either in subsets of firms facing strong union bargaining power, or with characteristics that prior literature identifies as important determinants of the effect of unionization on firm outcomes.