Equal Employment Opportunity Law and Firm Profitability

Joni Hersch

Journal of Human Resources, 1991, vol. 26, issue 1, 139-153

Abstract: Based on a sample of 260 cases reported in the Wall Street Journal between 1964 and 1986, this study finds that the equity value of firms charged with violating equal employment opportunity (EEO) laws fell at the time that a suit, decision, or settlement was announced. Most dramatically, the value of firms involved in class action suits fell 15.6 percent on average around the time of the suit. Further, the average loss to shareholders exceeds the amount firms are required to spend to settle the case. This may be due to the expected costs of changing employment practices or to the information about the firm's management that is revealed by the case.

Date: 1991
References: Add references at CitEc
Citations: View citations in EconPapers (9)

Downloads: (external link)
http://www.jstor.org/stable/pdfplus/145719
A subscription is required to access pdf files. Pay per article is available.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:uwp:jhriss:v:26:y:1991:i:1:p:139-153

Access Statistics for this article

More articles in Journal of Human Resources from University of Wisconsin Press
Bibliographic data for series maintained by ().