This study investigates the relationship between the presence of labor unions and earnings management. The results show a significant negative relationship between earnings management and labor unions, indicating that firms with labor unions engage in relatively more downward earnings adjustments compared to firms without unions. However, even when the absolute value of earnings management is used as the dependent variable, labor unions exhibit a significant negative relationship with earnings management. This means that the presence of labor unions is associated with relatively smaller magnitudes of both upward and downward earnings adjustments compared to firms without unions. Even when the absolute value of earnings management is analyzed by distinguishing firm performance levels, labor unions maintain a negative coefficient, indicating that labor unions play a role in reducing earnings management regardless of firm performance. This is consistent with the prediction that labor unions perform a monitoring role over managers, thereby reducing managerial earnings manipulation. In other words, the results of this paper suggest that labor unions serve an important function in corporate governance by reducing agency costs.