Timing is Key : When Does the Market React to Unionization Efforts?

We estimate short-term capital-market effects of unionization efforts at publicly-listed firms and their subsidiaries in the United States between 2011 and 2019. Our short-horizon event study reports significant negative average cumulative abnormal returns at the public announcement of successful union election certifications. These effects are more pronounced with increasing vote share in support of the union and persist when controlling for election-, firm-, and industry-specific characteristics. Our results suggest that, on average, the market perceives successful unionization as detrimental to future firm performance, expects unionization efforts, and mainly reacts to final, certified, and public outcome announcements. We attribute the timing of the measured effect to the semi-efficient market hypothesis and the increasing trend in anti-union campaigns, where only the outcome certification resolves the uncertainty surrounding the unionization process. Finally, we show that shareholders’ expectations regarding unionization efforts differ for firms with recurrent and rare election cases