DONG, Qingkai and Le, Anthony. "The Impact of Financial Reporting Mandates on Labor Unions." Journal of Accounting Research, Forthcoming.

Abstract

Labor unions in the United States are subject to financial reporting mandates. This paper studies how these mandates affect unions and their members. Using multiple regulation-based empirical designs, we document that these mandates adversely affect unions’ election outcomes. Additional analyses suggest that the negative effects stem from the strategic use of unions’ disclosed information by parties such as employers’ hired consultants rather than from improved oversight. Consistent with the mandate’s negative effects on unions, we find that unions spend substantial resources to lobby against more stringent reporting requirements. Lastly, we find that the mandate reduces the average pay of employees without clear benefits for employers, aside from reallocating investment from labor to capital. Collectively, our results suggest that disclosure mandates impose costs on unions and hurt their ability to represent employees, resulting in worse employment outcomes.