Negotiating with Labor under Financial Distress

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Oxford Journals Contact Us My Basket My Account Review of Corporate Finance Studies About This Journal Contact This Journal Subscriptions View Current Issue (Volume 2 Issue 1 March 2013) Archive Search Oxford Journals EconomicsSocial Sciences Review of Corporate Finance Studies Volume 1 Issue 1 Pp. 28-67. Negotiating with Labor under Financial Distress Efraim Benmelech

Harvard University and NBER Nittai K. Bergman

MIT Sloan and NBER Ricardo J. Enriquez

Protego - Evercore Address correspondence to Efraim Benmelech, Department of Economics, Harvard University, Littauer Center, Cambridge, MA 02138. E-mail: effi_benmelech{at}harvard.edu. Abstract 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. (JEL G23, G33, J31, J33, L93)

© The Author 2012. Published by Oxford University Press on behalf of The Society for Financial Studies. All rights reserved. For Permissions, please e-mail: journals.permissions@oup.com. « Previous | Next Article » Table of Contents This Article Review of Corporate Finance Studies (2012) 1 (1): 28-67. doi: 10.1093/rcfs/cfr001 First published online: February 7, 2012 » Abstract Full Text (HTML) Full Text (PDF) All Versions of this Article: cfr001v1 1/1/28 most recent Classifications Articles Services Alert me when cited Alert me if corrected Find similar articles Similar articles in Web of Science Add to my archive Download citation Request Permissions Citing Articles Load citing article information Citing articles via CrossRef Citing articles via Scopus Citing articles via Web of Science Citing articles via Google Scholar Google Scholar Articles by Benmelech, E. Articles by Enriquez, R. J. Search for related content Related Content Load related web page information Share Email this article CiteULike Delicious Facebook Google+ Mendeley Twitter What's this?

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