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Three Essays About the Spillover Effects of Labor Unions at Major Customer Firms on Suppliers' Corporate Policies /

Record Type:	Language materials, printed : Monograph/item
Title/Author:	Three Essays About the Spillover Effects of Labor Unions at Major Customer Firms on Suppliers' Corporate Policies // Ngoc Thi Le.
Author:	Le, Ngoc Thi,
Description:	1 electronic resource (181 pages)
Notes:	Source: Dissertations Abstracts International, Volume: 85-12, Section: A.
Contained By:	Dissertations Abstracts International85-12A.
Subject:	Finance. -
Online resource:	http://pqdd.sinica.edu.tw/twdaoapp/servlet/advanced?query=31140079
ISBN:	9798382812984

Three Essays About the Spillover Effects of Labor Unions at Major Customer Firms on Suppliers' Corporate Policies /
Le, Ngoc Thi,

Three Essays About the Spillover Effects of Labor Unions at Major Customer Firms on Suppliers' Corporate Policies /Ngoc Thi Le. - 1 electronic resource (181 pages)

Source: Dissertations Abstracts International, Volume: 85-12, Section: A.

This dissertation includes three essays on corporate finance. All three essays study the spill-over effects of labor unionization in the supply chain. Specifically, I examine labor unionization in a customer firm and how such an event affects suppliers' corporate policies.In the first essay, we estimate the causal effects of labor unionization at a major customer firm on its supplier's cash holdings and stock repurchases. We focus on these two short-term financial policies, which include cash holdings and repurchases. We empirically test for two opposite, non-mutually-exclusive effects: shielding vs. relationship-specific investment (RSI). We find that overall, the shielding effect dominates: dependent suppliers reduce cash holdings by 3% of total assets (or 22% of the sample mean) and increase repurchases by 0.5% of total assets (or 38% of the sample mean) to shield the firm from rent-seeking by newly unionized customers. In the second essay, we examine whether labor unionization at major customer firms affects suppliers' dividend payout policies. Dividend policies require long-term commitment, so firms are more likely to change the policies if their long-term cash flows are affected. We hypothesize that labor unionization at major customers increases suppliers' cost stickiness (i.e., the asymmetry in cost responses to decreases vs. increases in sales), resulting in a decrease in their future free cash flows. We find that dependent suppliers respond by reducing their total dividends (common dividends) by 0.7% (0.9%) of total assets and decreasing their dividend yield by 1.9 percentage points. We also find direct evidence of higher ex-post cost stickiness for the dependent suppliers after the labor unionization at their major customers.In the third essay, I examine whether labor unionization at major customer firms affects suppliers' innovation. I find that two years post-unionization at major customers, the dependent suppliers reduce their innovation input measured by R&D Investment by 2.6% in the first year and 2.5% in the second year of the total assets. However, the decline in R&D expenditure does not significantly reduce patent quantity and quality. I find evidence that affected suppliers tend to be more efficient in using their reduced resources in their innovation projects.

English

ISBN: 9798382812984Subjects--Topical Terms:

559073
Finance.
Subjects--Index Terms:

Corporate financial policies

Three Essays About the Spillover Effects of Labor Unions at Major Customer Firms on Suppliers' Corporate Policies /
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520 $a This dissertation includes three essays on corporate finance. All three essays study the spill-over effects of labor unionization in the supply chain. Specifically, I examine labor unionization in a customer firm and how such an event affects suppliers' corporate policies.In the first essay, we estimate the causal effects of labor unionization at a major customer firm on its supplier's cash holdings and stock repurchases. We focus on these two short-term financial policies, which include cash holdings and repurchases. We empirically test for two opposite, non-mutually-exclusive effects: shielding vs. relationship-specific investment (RSI). We find that overall, the shielding effect dominates: dependent suppliers reduce cash holdings by 3% of total assets (or 22% of the sample mean) and increase repurchases by 0.5% of total assets (or 38% of the sample mean) to shield the firm from rent-seeking by newly unionized customers. In the second essay, we examine whether labor unionization at major customer firms affects suppliers' dividend payout policies. Dividend policies require long-term commitment, so firms are more likely to change the policies if their long-term cash flows are affected. We hypothesize that labor unionization at major customers increases suppliers' cost stickiness (i.e., the asymmetry in cost responses to decreases vs. increases in sales), resulting in a decrease in their future free cash flows. We find that dependent suppliers respond by reducing their total dividends (common dividends) by 0.7% (0.9%) of total assets and decreasing their dividend yield by 1.9 percentage points. We also find direct evidence of higher ex-post cost stickiness for the dependent suppliers after the labor unionization at their major customers.In the third essay, I examine whether labor unionization at major customer firms affects suppliers' innovation. I find that two years post-unionization at major customers, the dependent suppliers reduce their innovation input measured by R&D Investment by 2.6% in the first year and 2.5% in the second year of the total assets. However, the decline in R&D expenditure does not significantly reduce patent quantity and quality. I find evidence that affected suppliers tend to be more efficient in using their reduced resources in their innovation projects.
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653 $a Corporate financial policies
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653 $a Innovation
653 $a Labor unions
653 $a Supply chain
653 $a Stock repurchases
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