Finance Brown Bag Seminar
The Finance Brown Bag Seminar is held jointly with the Vienna Graduate School of Finance (VGSF) and serves as a presentation platform for PhD students, faculty members, and visitors. It usually takes place on Wednesdays from 12:00 to 13:00 (location tba). For further information, please contact firstname.lastname@example.org
Winter Term 2020/2021
October 20th, 2020, 1:30-2:30 p.m.online via MS Teams
Roberto Pinto (Lancaster University)
Title: Bargaining and Debt Structure
Abstract: Conventional wisdom is that leverage improves a firm's position when bargaining with employees, by pushing money off the negotiation table. In a dynamic model of the firm-employee negotiation, we show the opposite can be true. Leverage and shorter debt maturity reduce the firm's ability to withstand long strikes. If workers suffer more from long negotiations, this reduced ability weakens the shareholders’ bargaining position. We use firm-level union elections and the passage of labor laws to capture changes in employees' bargaining power. We find evidence consistent with our theoretical predictions. Our results indicate that firms respond to powerful employees by increasing their financial resiliency to long negotiations and strikes.