| Sumario: | An empirical examination is conducted to determine whether or not stockholder wealth rises in response to passage of a right-to-work (RTW) law—a state law banning union security clauses from collective bargaining agreements. Data were drawn from a sample of 23 companies in Louisiana and 12 in Idaho, all trading on the New York Stock Exchange, or NASDAQ when the act was passed. Findings reveal that the passage of RTW legislation did increase shareholder wealth and, according to investors, the expected profits of firms operating within a state that had recently passed a RTW into law. Findings conclude that RTW legislation has a positive impact on the future profits of business organizations, presumably stemming from the law's negative impact on labor unions.
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