Abstract
This paper examines how labor unionization affects suppliers’ trade credit provisions. Using a regression discontinuity design based on close-call NLRB union elections, I find that firms narrowly passing union elections experience a significant decrease in trade credit from suppliers. This effect is attenuated in right-to-work states and for firms with better financial performance. These findings suggest that suppliers view unionization as a risk factor on labor costs, financial distress likelihood, and reduced operational flexibility. Overall, this paper adds to the literature on labor unions’ economic impacts, determinants of trade credit, and the interactions between different corporate claim holders.
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