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Organized Labor and Information Asymmetry in the Financial Markets

Abstract : Prior results from the labor relations literature suggest that revealing information weakens management's position in collective bargaining. Thus, when facing organized labor, management has an incentive to preserve the information asymmetry with outsiders. This study uses a sample from a large cross-section of the economy over several years to test this relation. Results are consistent with this prediction. Strong organized labor is associated with higher bid-ask spreads, higher probability of informed trading, lower trading volume and lower analyst coverage. These relations hold after controlling for numerous factors such as growth opportunities or risk.
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Contributor : Antoine Haldemann <>
Submitted on : Monday, May 10, 2010 - 11:32:12 AM
Last modification on : Sunday, March 18, 2018 - 5:42:01 PM

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Gilles Hilary. Organized Labor and Information Asymmetry in the Financial Markets. Review of Accounting Studies, Springer Verlag, 2006, vol.11, n°4, pp. 525-548. ⟨10.1007/s11142-006-9015-y⟩. ⟨hal-00482326⟩

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