Labor Unions and Non-Shareholding Stakeholders

Using corporate social responsibility (CSR) scores, we examine the effect of unionization on non-shareholding stakeholders and the value of CSR for unionized firms. Our findings suggest that unionization leads to lower CSR. This negative relation between unionization and CSR is stronger for financially constrained firms. We address endogeneity issues by controlling for firm characteristics including firm fixed effects, examining a quasi-natural experiment, and using regression discontinuity design examining union certification elections. Unionized firms with lower CSR have better alignment of CEO and shareholder interests and higher market values than other unionized firms.