Corporate governance and employee treatment: evidence from takeover defenses
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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.
KeywordsCEO tenure CEO pay Labor litigation Labor law
JEL ClassificationG30 K15 K31 K41
This research did not receive any specific grant from funding agencies in the public, commercial, or not-for-profit sectors.
Compliance with ethical standards
Conflict of interest
The authors declare that they have no conflict of interest. Both authors declare that they have no conflict of interest.
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