Are unionized firms more likely to use nonbank loans?

We investigate whether and how unionization affects a firm's use of nonbank loans. Based on a comprehensive sample, we find that unionization is significantly and positively related to a firm's likelihood of using nonbank loans. We also find that the effect is more pronounced in firms with lower information asymmetry. Overall, the results are consistent with the notion that unionized firms are more likely to use nonbank loans to reduce the proprietary costs of information disclosure. The findings also contribute to a better understanding of why firms choose expensive nonbank loans.