Corporate governance and employee treatment: evidence from takeover defenses

Omer Unsal () and Blake Rayfield ()
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Omer Unsal: Merrimack College
Blake Rayfield: Indiana State University

Journal of Economics and Finance, 2020, vol. 44, issue 2, No 8, 391 pages

Abstract: 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.

Keywords: CEO tenure; CEO pay; Labor litigation; Labor law (search for similar items in EconPapers)
JEL-codes: G30 K15 K31 K41 (search for similar items in EconPapers)
Date: 2020
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DOI: 10.1007/s12197-019-09478-4

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