| Popis: |
We analyze how strike threats affect firms' financing decisions. For identification, we focus on CEOs who experience a strike in another firm in which they serve as director. A matching approach controls for the potential endogeneity of outside directorships. Theoretically, CEOs may either increase leverage and decrease cash to improve the bargaining position with labor or apply more conservative financial policies to enhance their financial flexibility. We find evidence for both perspectives. If CEOs experience an actual strike, they subsequently reduce leverage and increase cash in their firms. By contrast, CEOs engage in the opposite behavior after observing labor negotiations in which a strike could be averted. |
