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Journal of Management Accounting Research / Volume 20 / Issue 1 / ARTICLES

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The Agency Cost Effects of Unionization on Firm Value

Journal of Management Accounting Research 20 (1), 133 (2008);
doi: 10.2308/jmar.2008.20.1.133

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Vic Naiker
University of Waterloo

Farshid Navissi
Monash University

VG Sridharan
University of Melbourne

ABSTRACT:Using a sample of 99 New Zealand stock-exchange-listed firms weemploy agency framework and strategy typology to examine whether introductionof unionization legislation affects value of prospector firms more negativelythan defender firms. The results from this examination indicate thatfirms characterized by strategy of higher Growth-Diversity and Innovation-Risk (prospectorfirms) experience greater loss in value. We attribute the resultsto the higher agency costs associated with the strategies adoptedby prospector firms. The results hold after controlling for variablessuch as size, industry membership, labor intensity, and proportion ofunionized workers. ©2008 American Accounting Association

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