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Union Concessions following Asset Sales and Takeovers

Published online by Cambridge University Press:  05 October 2018

Erik Lie  and
Tingting Que
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Abstract

We document that the likelihood of asset sales increases with union presence and union wages. Furthermore, acquiring firms gain significant concessions from the incumbent union following asset sales. Finally, the anticipation of union concessions helps explain the excess stock returns around asset sale announcements. We find no comparable effects for takeovers. We conclude that asset sales, but not takeovers, are partially motivated by the potential to extract concessions from unions.

Type
Research Article
Information
Journal of Financial and Quantitative Analysis , Volume 54 , Issue 1 , February 2019 , pp. 393 - 424
Copyright
Copyright © Michael G. Foster School of Business, University of Washington 2018 

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Footnotes

1

We are grateful for comments from an anonymous referee, Art Durnev, Mohamed Ghaly, Dennis Hamilton, Jarrad Harford (the editor), Feng Jiang, Kose John, Han Kim, Anzhela Knyazeva, Diana Knyazeva, David Mauer, Amrita Nain, Anand Vijh, Tong Yao, and seminar participants at the University of Iowa, the University of Alabama in Huntsville, and the University of Texas at Brownsville. We also thank Qianqian Huang and Feng Jiang for generously sharing union election and strike data.

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