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Unions’ Impact On Firms’ Financial Decision Making: A Look At Right-To-Work Laws And Their Impact On Firms’ Leverage Decisions, Rachana Muvvala
Unions’ Impact On Firms’ Financial Decision Making: A Look At Right-To-Work Laws And Their Impact On Firms’ Leverage Decisions, Rachana Muvvala
CMC Senior Theses
I study the impact of unions on firms’ financial decision making by exploring their capital structure, specifically leverage. I test two opposing hypotheses to understand the relationship between unions and firms’ leverage: (1) the bargaining hypothesis which suggests that firms use higher leverage as a bargaining device with unions, and (2) the crowding-out hypothesis which suggests that firms have lower leverage because unions crowd out their debt capacity due to their perceived riskiness. Focusing on the 2007 to 2022 period, I examine right-to-work (RTW) laws, since they are exogenous shocks that decrease union power in five different states. Then, I …