Timing is key: When does the market react to unionization efforts?

Abstract

We estimate short-term capital-market effects of unionization efforts at publicly-listed firms and their subsidiaries in the United States between 2011 and 2019. Our short-horizon event study reports significant negative average cumulative abnormal returns at the public announcement of successful union election certifications. Our results suggest that, on average, the market perceives successful unionization as detrimental to future firm performance, expects unionization efforts, and mainly reacts when all uncertainty is resolved at the publicly-announced certification. Finally, we show that shareholders’ expectations regarding unionization efforts differ for firms with recurrent and rare election cases.