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The Impact of Non-Financial Stakeholders on Accounting Conservatism: The Case of Labor Unions

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Issue Date
2017-06
Publisher
College of Business Administration (경영대학)
Citation
Seoul Journal of Business, Vol.23 No.1, pp. 1-37
Keywords
Accounting ConservatismConditional ConservatismLabor UnionsLayoff
Abstract
This study examines the relation between labor union strength and conditional accounting conservatism. We argue that labor unions can have an increasing or decreasing effect on conditional conservatism due to considerations associated with layoffs and job security of union members. Using Basu's (1997) asymmetric timeliness framework and multiple measures of union strength, we find that labor union strength leads to less conditional conservatism, even after controlling for known determinants of conditional conservatism. Our results are robust to endogeneity tests as well as a battery of other sensitivity tests. We further demonstrate that the negative relation likely results from union's ability to reduce the likelihood of layoffs. Overall, we provide fresh evidence about the impact of a key non-financial stakeholder, namely labor unions, on an important property of earnings. [ABSTRACT FROM AUTHOR] Copyright of Seoul Journal of Business is the property of Seoul National University, College of Business Administration and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)
ISSN
1226-9816
Language
English
URI
https://hdl.handle.net/10371/168267
DOI
https://doi.org/10.35152/snusjb.2017.23.1.001
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College of Business Administration/Business School (경영대학/대학원)Dept. of Business Administration (경영학과)Seoul Journal of Business (SJB)Seoul Journal of Business Volume 23, Number 1/2 (2017)
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