Capital structure as a strategic variable: Evidence from collective bargaining

Research output: Contribution to journalArticlepeer-review

189 Scopus citations


I analyze the strategic use of debt financing to improve a firm's bargaining position with an important supplier-organized labor. Because maintaining high levels of corporate liquidity can encourage workers to raise their wage demands, a firm with external finance constraints has an incentive to use the cash flow demands of debt service to improve its bargaining position with workers. Using both firm-level collective bargaining coverage and state changes in labor laws to identify changes in union bargaining power, I show that strategic incentives from union bargaining appear to have a substantial impact on corporate financing decisions.

Original languageEnglish (US)
Pages (from-to)1197-1232
Number of pages36
JournalJournal of Finance
Issue number3
StatePublished - Jun 2010

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics


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