Negotiating with Labor under Financial Distress
Author(s)
Benmelech, Efraim; Bergman, Nittai; Enriquez, Ricardo J.
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We analyze how firms renegotiate labor contracts to extract concessions from labor. While anecdotal evidence suggests that firms tend to renegotiate wages downward in times of financial distress, there is no empirical evidence that documents such renegotiation, its determinants, and its magnitude. This article attempts to fill this gap. Using a unique data set of airlines, which includes detailed information on wages and pension plans, we document an empirical link between airline financial distress, pension underfunding, and wage concessions.
Date issued
2012-02Department
Sloan School of ManagementJournal
Review of Corporate Finance Studies
Publisher
Oxford University Press on behalf of The Society for Financial Studies
Citation
Benmelech, E., N. K. Bergman, and R. J. Enriquez. “Negotiating with Labor Under Financial Distress.” Review of Corporate Finance Studies 1, no. 1 (September 1, 2012): 28–67.
Version: Author's final manuscript
ISSN
2046-9128
2046-9136