The literature suggests that the presence of a labor union poses operational risk for firms by reducing operating flexibility. We posit that managers stockpile inventory in response to their heightened operational risk, such as potential strikes, so that managers maintain bargaining power in...

We examine the relation between labor union strength and investment efficiency using comprehensive firm-level data of Korean listed companies. We find that the perceived underinvestment related to unionization documented in previous studies is attributable to a negative relation between union...

We study labor unions, an important stakeholder group that has not been a focus of the earnings smoothing literature. We posit that managers strike a balance between sheltering resources from employees’ profit sharing demands and catering to employees’ aversion to downside risk by smoothing...