The effect of unionization on industry merger activity around negative economy-wide shocks

Abstract

We investigate the effect of labor unionization on industry-level takeover activity after negative economy-wide shocks. Focusing on the 2008 financial crisis, we find that merger intensities drop significantly during the post-crisis period, though the degree of unionization in an industry attenuates this negative effect. Our analyses of the 2001 and 1990 economic recessions lead to similar results. While unionization is known to deter M&A activity on average, our results indicate that in dire times, when firm survival is at risk, unions appear to resist relatively less to restructuring activities in the form of mergers.