Review of Accounting Studies

, Volume 11, Issue 4, pp 525–548

Organized labor and information asymmetry in the financial markets


DOI: 10.1007/s11142-006-9015-y

Cite this article as:
Hilary, G. Rev Acc Stud (2006) 11: 525. doi:10.1007/s11142-006-9015-y


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.


Information asymmetry Labor relation 

JEL Classifications:

M41 D82 J50 G39 

Copyright information

© Springer Science+Business Media, LLC 2006

Authors and Affiliations

  1. 1.HKUSTKowloonHong Kong

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