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Degree

Doctor of Philosophy, Ohio State University, Accounting and MIS, 2012.

Abstract

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. Prior research suggests that, to improve bargaining position, unionized firms have incentives to maintain information asymmetry with organized labor. While withholding public disclosures improves firms’ bargaining position with labor unions, I conjecture that higher information asymmetry increases the cost of external financing. I provide evidence that, by accessing bank loans, firms with strong organized labor are able to attenuate the cost of information asymmetry by providing banks with information that was deliberately withheld from the public markets. Further, I show that organized labor influences the structure of syndicated loans because higher information asymmetry induces lead lenders to form more concentrated syndicates. In addition, my firm-level data shows a significant with-in industry variation of collective bargaining coverage and allows me to identify a non-unionized control group. I argue and find evidence that firm-level data is superior to the widely used industry-level data in explaining firm-specific contractual outcomes. Overall, this study demonstrates that firms’ incentives to maintain information asymmetry with organized labor have significant influence on firms’ debt contracting decisions and outcomes.

Subject Headings

Accounting; Economics; Finance

Keywords

Collective Bargaining; Debt Contracts; Information Asymmetry; Labor Unions; Private Debt

Committee / Advisors

Anne Beatty (Committee Chair)
Darren Roulstone (Committee Member)
Tzachi Zach (Committee Member)
Helen Zhang (Committee Member)

Document number: osu1343146465
Permalink: http://rave.ohiolink.edu/etdc/view?acc_num=osu1343146465

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