The market’s reaction to two supreme court rulings on American labor law

The Supreme Court has gradually narrowed the number of persons who are protected by the National Labor Relations Act should they seek to form or join a union, in part by ruling that professionals who also serve as supervisors of less skilled employees are not covered by the Act. The market’s reaction to the two latest rulings, Health Care & Retirement Corp. and Kentucky River is researched herein. Shareholder wealth rose for health care firms in response to each ruling. The market response was greater for the latter decision, signaling investor beliefs regarding the benefit to employers and the likely future direction of court decisions.