노조의 활동성이 자본비용에 미치는 영향

We investigate whether the activity of labor union is related to cost of capital of firms. We examine that the impact of the activity of labor union on cost of capital can vary depending on sharing of the interest by workers which members of labor union and stakeholders of firms. Workers’ interests are likely to be closely aligned in supporting actions that decrease the probability that the firm will default on debt payments since workers are largely fixed claimants. However, active union may have negative effect on the quality of financial reporting and financial leverage. In this regards, active labor union make firms cost of debt higher. Hence, we conjecture activity of labor union does not have significantly related to cost of debt. Meanwhile, shareholders’ response on strong unions can be negative because unions make wages sticky, layoffs costly, and often intervene in firms’restructuring, unions reduce firms’ operating flexibility, then shareholders should require higher returns on the capital they provide. This implies firms with active labor union have higher cost of equity compared to other firms because shareholders, residual claimants, response negatively to active labor unions. We find that the activity of labor union positively relate to cost of equity, supporting the hypothesis 1. This indicates that shareholders of firm with active union require higher returns for bearing the extra risk associated with lower operating flexibility by active labor union. However, we don’t find significant relationship between the activity of labor union and cost of debt. We provide different perspective from studies by suggesting that creditors and shareholders response differently to the firms with active labor union. Since Korean labor unions are famous for heavy labor dispute, we provide implications to investors of Korean companies.