This study examines the relation between labor unions and accounting conservatism. Prior theoretical and empirical research suggests that labor unions reduce agency costs of debt by using their bargaining power to reduce managements’ incentive to substitute high risk investments for low risk investments. Conceptually, accounting conservatism also serves to restrict this type of asset substitution. Thus, labor unions and conservatism might act as substitutes. However, other research shows that labor unions induce greater information asymmetry, which has been linked to increased demand for conservatism. This implies a complementary relation between unions and conservatism. To determine which of these relations hold, we use Basu’s (1997) asymmetric timeliness framework and Khan and Watts’s (2009) C-Score to execute our tests. We find that lower levels of union strength are associated with higher levels of conservatism, even after controlling for bid-ask spread, size, market-to-book ratio, leverage, and litigation risk. Results are also robust to a battery of sensitivity tests, including controlling for endogeneity, alternative measurement horizons, CEO ownership, and unconditional conservatism. Overall, we provide evidence about the impact of a key stakeholder, namely labor unions, on an important property of earnings.