Correction to: 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 9, 392-416

Abstract: Abstract This study investigates if antitakeover provisions are a value-enhancing indicator of corporate governance by estimating the effect of takeover susceptibility to labor litigations. Using a unique hand-collected dataset of employee lawsuits, we find a positive relationship between employee litigation and takeover protection. We document that employee lawsuits increase a firm’s susceptibility to a hostile takeover. In addition, we document that higher costs of litigation, measured by fees and case duration, increase the firms’ suitability to takeover. Our results indicate that takeover protections may decrease corporate attention to employees. This effect may be because entrenched managers may avoid long-term investment in stakeholders and enjoy “the quiet life” following the reduced threat of a hostile takeover.

Keywords: Employee lawsuits; Hostile takeovers; Corporate governance; Managerial entrenchment; K31; K41; G30; G34 (search for similar items in EconPapers)
Date: 2020
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DOI: 10.1007/s12197-019-09486-4

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