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- Title
Does the Political Power of Nonfinancial Stakeholders Affect Firm Values? Evidence from Labor Unions.
- Authors
Stanfield, Jared; Tumarkin, Robert
- Abstract
Whereas corporate political connections are known to enhance equity values, we demonstrate that union political activity can have the opposite effect. We examine the consequences of a recent Australian state law that restricts union political activity but does not change collective bargaining rights. In the wake of this law, the equity values of affected unionized firms significantly increase, and consistent with this market reaction, these firms are able to bargain for more favorable labor contracts than their unionized peers in other states. The evidence strongly suggests that unions use political activism to extract rents from shareholders and benefit their members.
- Subjects
POWER (Social sciences); STAKEHOLDERS; ENTERPRISE value; POLITICAL participation of labor unions; LABOR union laws; EQUITY (Law); COLLECTIVE bargaining policy; FINANCIAL market reaction; LABOR contracts; POLITICAL participation
- Publication
Journal of Financial & Quantitative Analysis, 2018, Vol 53, Issue 3, p1101
- ISSN
0022-1090
- Publication type
Article
- DOI
10.1017/S002210901800008X