Abstract
In this study, we use a unique hand-collected dataset of employee lawsuits to understand the effect of litigation on CEO turnover. We gather 28,258 employee disputes (after initial court hearing) dating between the years 2000 and 2014 to test the relationship between executive turnover following employee allegations. We find increased turnover of CEOs following labor lawsuits. Additional analysis suggests that, following the lawsuits, CEO compensation decreases and becomes more sensitive to cash holding. Our results show that employee lawsuits have an impact on CEO turnover, regardless of the case outcome or motivation. Overall, we document the importance of employee treatment in the workplace. We conclude employee treatment may impact both the tenure and future job prospects of a CEO.
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Bloomberg Law Reports
U.S Equal Employment Opportunity Commission, https://www.eeoc.gov/eeoc/statistics/enforcement/charges.cfm
2015 Hiscox Guide to Employee Lawsuits, http://www.hiscox.com/shared-documents/The-2015-Hiscox-Guide-to-Employee-Lawsuits-Employee-charge-trends-across-the-United-States.pdf
Our results quantitatively remain same when we control for industry and year fixed effects, as well as clustering standard errors at 2-digit and 3-digit SIC code.
For NLRB Litigation-Case data http://www.nlrb.gov/opengov/nlrb-data-datagov
U.S Department of Labor Enforcement Data: http://ogesdw.dol.gov/views/data_catalogs.php
In untabulated results, our results remain same when we use a binary variable for lawsuit.
We also re-estimate the regressions including industry dummies based on the two-digit, three-digit and four-digit Standard Industries Classification codes. The estimated coefficients and statistical significance of the independent variables remains quantitatively same with those reported in the tables and discussed below.
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Unsal, O., Rayfield, B. Corporate governance and employee treatment: evidence from takeover defenses. J Econ Finan 44, 361–391 (2020). https://doi.org/10.1007/s12197-019-09478-4
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DOI: https://doi.org/10.1007/s12197-019-09478-4