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Do labor unions always lead to underinvestment?
Hyungjin Cho1; Bryan Byung-Hee Lee2; Woo-Jong Lee3; Byungcherl Charlie Sohn4
2017-03-01
Source PublicationJournal of Management Accounting Research
ISSN1049-2127
Volume29Issue:1Pages:45-66
Abstract

We examine the relation between labor union strength and investment efficiency using the 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 strength and investment in overinvesting firms. In fact, union strength is positively related to the level of investment in underinvesting firms. We further find that the relation between union strength and investment efficiency is more pronounced for chaebol firms where inefficient investments are more likely due to greater agency problems between the controlling and minority shareholders. Finally, we document that the investment has more positive value implications in firms with a stronger union. Our results suggest that unions play an important role as a nonfinancial stakeholder in curbing inefficient investments.

KeywordLabor Union Investment Efficiency Overinvestment Underinvestment Chaebol
DOIhttps://doi.org/10.2308/jmar-51534
URLView the original
Indexed By其他
Language英语
WOS Research AreaBusiness & Economics
WOS SubjectBusiness, Finance
WOS IDWOS:000406052200004
PublisherAMER ACCOUNTING ASSOC, 5717 BESSIE DR, SARASOTA, FL 34233 USA
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Citation statistics
Cited Times [WOS]:6   [WOS Record]     [Related Records in WOS]
Document TypeJournal article
CollectionDEPARTMENT OF ACCOUNTING AND INFORMATION MANAGEMENT
Affiliation1.Universidad Carlos III de Madrid, Spain
2.NEOMA Business School, France
3.Seoul National University, South Korea
4.University of Macau, Macao
Recommended Citation
GB/T 7714
Hyungjin Cho,Bryan Byung-Hee Lee,Woo-Jong Lee,et al. Do labor unions always lead to underinvestment?[J]. Journal of Management Accounting Research,2017,29(1):45-66.
APA Hyungjin Cho,Bryan Byung-Hee Lee,Woo-Jong Lee,&Byungcherl Charlie Sohn.(2017).Do labor unions always lead to underinvestment?.Journal of Management Accounting Research,29(1),45-66.
MLA Hyungjin Cho,et al."Do labor unions always lead to underinvestment?".Journal of Management Accounting Research 29.1(2017):45-66.
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