Prof. Marcin Kacperczyk from UBC is giving a VGSF research seminar on "Labor
Unions, Operating Leverage, and Expected Stock Returns" on MONDAY, October
16th, from 16:30 to 18:00 at the WU Wien (UZA 4, Nordbergstrasse 15, 1090
Wien, Room D204, 2. Obergeschoß, see
http://www.wu-wien.ac.at/portal/ueber_wu/standorte/lageplan4 for a detailed
plan). Please find the paper's abstract below.
Marcin is going to be in Vienna on Monday. If you like to meet him and to
discuss your research with him, please contact Michael Halling
(michael.halling(a)univie.ac.at).
Best,
Michael Halling
Abstract
We examine the effect of an important friction in the labor market, that
generated by labor unions, on the cross-section of expected stock returns.
We hypothesize that labor unions increase expected stock returns by
increasing firms share of fixed labor costs in total labor costs and thus
their operating leverage. Consistent with our hypothesis, we find that
expected returns are higher for firms in more unionized industries and that
the effect is stronger when unions face a more favorable bargaining
environment. Furthermore, using instrumental-variables techniques we
establish a causal link from unionization to expected returns. Finally, we
provide evidence that unions increase expected returns through the operating
leverage channel. Overall, our findings underline the importance of labor
markets imperfections in understanding cross-sectional variation in
expected returns.