Abstract
This paper examines the effect of unionization on the profitability of firms. Abnormal monthly common stock returns for a sample of 253 NYSE-listed firms are estimated for the month in which the union petitions for an election and for the month in which the National Labor Relations Board certifies the election outcome. The results suggest that unionization, on average, is associated with a reduction in equity value. When unions win an election, the average loss associated with the unionization drive is 3.8 percent of equity value. When unions lose an election, there is an average net reduction of 1.3 percent in the equity value of the firm.
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