Labor unions and payout policy: A regression discontinuity analysis
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چکیده
We study the causal effect of labor unions on corporate payout policy by using a regression discontinuity (RD) design. Passing a union election leads to an 8.7% lower dividend ratio and a 17.9% lower total payout ratio (including both dividends and share repurchases) than failing an election in the following year. The negative effect of unions on payout is absent in firms located in states with right-to-work laws but without work stoppage provisions. Operating flexibility appears to be a plausible underlying mechanism through which union power influences corporate payout, and firms use the saved earnings from reductions in payout to invest in net working capital rather than paying off debt or increasing cash holdings. Our paper sheds new light on the determinants of firm payout policy and the role of labor unions in corporate finance decisions.
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تاریخ انتشار 2015