Don't interfere with my rights! Employee Rights Violation and the Cost of Bank Loans

Authors

Amirhossein Fard, Texas Lutheran University
Ibrahim Siraj, Long Island University
Bin Wang, Marquette UniversityFollow

Document Type

Article

Publication Date

12-2022

Publisher

Wiley

Source Publication

Financial Markets, Institutions & Instruments

Source ISSN

0963-8008

Original Item ID

10.1111/fmii.12167

Abstract

We study the relationship between the cost of bank loans and the charges filed to the National Labor Relations Board (NLRB) due to managerial interference in employee rights. Loans issued after the filing of the allegations are associated with significantly higher loan spreads than loans initiated before the filing of allegations. Strong allegations that result in withdrawal with adjustments or compliance tend to positively affect the loan pricing. Further, interfering firms tend to experience higher default risks in the years following the filing of charges. Our paper is the first in the literature to show the impact of violation of employee rights on the cost of bank loans, which has an implication for environmental, social, and governance (ESG) lending where loan contract terms are contingent on borrower ESG performance.

Comments

Accepted version. Financial Markets, Institutions & Instruments, Vol. 31, No. 5 (December 2022): 239-258. DOI. © 2022 Wiley. Used with permission.

Recommended Citation

Fard, Amirhossein; Siraj, Ibrahim; and Wang, Bin, "Don't interfere with my rights! Employee Rights Violation and the Cost of Bank Loans" (2022). Finance Faculty Research and Publications. 157.
https://epublications.marquette.edu/fin_fac/157