Labor unions and forms of corporate liquidity
Tong, Zhenxu
Date: 1 September 2015
Journal
Journal of Business Finance and Accounting
Publisher
Wiley
Publisher DOI
Abstract
We examine how the presence of labor unions affects a firm’s choice of
corporate liquidity between bank lines of credit and corporate cash holdings. We find
that firms in industries with higher unionization rates hold a higher fraction of
corporate liquidity in the form of bank lines of credit. We divide the firms into subgroups
and ...
We examine how the presence of labor unions affects a firm’s choice of
corporate liquidity between bank lines of credit and corporate cash holdings. We find
that firms in industries with higher unionization rates hold a higher fraction of
corporate liquidity in the form of bank lines of credit. We divide the firms into subgroups
and find that this positive relationship holds for firms that are not in a state
with right-to-work legislation and for firms that are financially constrained. Our
findings are consistent with the hypothesis that a firm chooses the forms of corporate
liquidity to take advantage of the bargaining benefits associated with bank lines of
credit.
Finance and Accounting
Faculty of Environment, Science and Economy
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