Financial misconduct and employee mistreatment: evidence from wage theft

Aneesh Raghunandan

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: I examine the relation between firms’ financial conduct and wage theft. Wage theft represents the single largest form of theft committed in the United States and primarily affects firms’ most vulnerable employees. I show that wage theft is more prevalent (i) when firms just meet or beat earnings targets and (ii) when executives’ personal liability for wage theft decreases. Wage theft precedes financial misconduct while the theft is undetected, but once firms are caught engaging in wage theft they are more likely to shift to engaging in financial misconduct. My findings highlight an economically meaningful yet previously undocumented way in which firms’ financial incentives relate to employee treatment.

Keywords: wage theft; real earnings management; financial misconduct; labor practices (search for similar items in EconPapers)
JEL-codes: J31 J83 K31 M14 M41 (search for similar items in EconPapers)
Pages: 39 pages
Date: 2021-09-01
New Economics Papers: this item is included in nep-law
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Citations: View citations in EconPapers (10)

Published in Review of Accounting Studies, 1, September, 2021, 26(3), pp. 867 - 905. ISSN: 1380-6653

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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:109863

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