Events

Dr. Sunny (Seung Yeon) Yoo
Assistant Professor in Accounting
School of Management and Economics
The Chinese University of Hong Kong, Shenzhen

This paper examines managers’ strategic use of financial disclosure in labor negotiations with unions. Using the exogenous expiration date of collective bargaining contracts, I find that when wage negotiations are imminent, firms strategically redact information about material agreements. Strategic redaction is pronounced when unions cannot accurately predict firms’ prospects, when firms have low growth opportunities, when liquidity is less constrained, and when the estimated cost of a work stoppage is low. Analysis of wage settlement outcomes suggests that strategic disclosure enhances firms’ bargaining power and suppresses unions’ wage demand. However, strategic disclosure is statistically uncorrelated to ex post performance. These results imply that firms strategically withhold information to balance the costs and benefits of information asymmetry.