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IJLMA
59,1
Received 24 August 2015
Revised 24 October 2015
Accepted 28 October 2015
International Journal of Law and
Management
Vol 59 No. 1,2017
pp. 2-20
dEmeraldPublishingLinited
1754-243X
Doi 10.11084JLMA-08215-X46
The LMRDA. Another labor law
that benefits firms?
Steven E. Abraham
Department of Management, SUNY-Oswego, Oswego, New York, USA
Abstract
Purpose - This paper aims to examine the impact of the Labor Management Reporting and Disclosure Act
(LMRDA). It is expected that returns would have increased in response to the law's passage, as it imposed a
number of restrictions on unions vis-d-vis management and instituted many rules regulating unions' internal
affairs.
Design/methodology/approach - This paper uses event study methodology, which examines the
impact of the law's passage on the shareholder returns to the firms likely to have been affected by the law.
Three different samples are used. Shareholder returns are examined on critical dates associated with the
passage of the law to assess whether it benefited the firms in the samples.
Findings - Shareholder returns to firms expected to have been affected by the LMRDA fell in comparison to
their competitors' returns, indicating that the law was viewed by investors as being beneficial for firms.
Presumably, the restrictions the law placed on unions were judged to be more important by investors than the
improvement in unions' image that might have resulted from the law, indicating that the law benefitted firms.
Originality/value - This is the first paper that has examined the impact of the LMRDA empirically to
assess its impact on firms.
Keywords Event studies, Labour law, Union-management relations
Paper type Research paper
1. Introduction
It has been demonstrated empirically that the laws governing private-sector Labor Relations
in the USA make a difference. The National Labor Relations Act (NLRA), the major law
governing union-management relations in the USA, mostly comprises three different laws
passed at different times: the Wagner Act (1935) the Taft-Hartley Act (1947) and the
Labor-Management Reporting and Disclosure Act (1959). Olson and Becker (1990)
demonstrated that the Wagner Act (1935) was detrimental to firms, and Abraham (1996)
demonstrated that the Taft-Hartley Act was beneficial to firms. This work examines the
impact of the Labor Management Reporting and Disclosure Act (LMRDA) and assesses
whether it benefitted firms, as most would expect[1].
This question is worthy of investigation for two main reasons. First, because the LMRDA
is the third major piece of the NLRA, this is a logical extension of the two works just
mentioned. Second, while most would agree that the LMRDA was detrimental to unions, it is
less clear that it benefited firms. As will be discussed, only one title of the law had provisions
that dealt with unions vis-d-vis management, and while most of the provisions in that title
would have been beneficial to management, there also were a few that actually benefited
unions. The other six titles in the law imposed a number of restrictions on unions, but an
argument can be made that unions would have benefited from those provisions as well.
Therefore, the impact of the LMRDA is worthy of investigation. Section 2 discusses the
events leading to the passage of the LMRDA as well as some of the law's main provisions.
Section 3 discusses the empirical approach used to assessing the effects of the law, and
Section 4 reports and discusses the results.](ViewImageLocal?handle=hein.journals/ijlm59&div=1&collection=&method=preview&ext=.png&size=3)
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