Corporate governance and employee treatment: evidence from takeover defenses

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 emp...

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Bibliographic Details
Published in:Journal of economics and finance 2020-04, Vol.44 (2), p.361-391
Main Authors: Unsal, Omer, Rayfield, Blake
Format: Article
Language:English
Subjects:
Antitrust
Corporate governance
Costs
Datasets
Economics
Economics and Finance
Employees
Executive compensation
Fees & charges
Finance
Fines & penalties
Intellectual property
Labor disputes
Litigation
Macroeconomics/Monetary Economics//Financial Economics
Stockholders
Studies
Tenure
Turnover
Wages & salaries
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Summary: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.
ISSN:1055-0925
1938-9744
DOI:10.1007/s12197-019-09478-4