43 Pages Posted: 4 Jan 2014 Last revised: 7 Jan 2017
Date Written: January 6, 2017
This paper explores the mechanisms by which corporate prestige produces distorted legal outcomes. Drawing on social psychological theories of status, we suggest that prestige influences audience evaluations by shaping expectations, and that its effect will differ depending on whether a firm’s blameworthiness has been firmly established. We empirically analyze a unique database of over 500 employment discrimination suits brought between 1997 and 2008, finding that prestige is associated with a decreased likelihood of being found liable (suggesting a halo effect in assessments of blameworthiness), but with more severe punishments among organizations that are found liable (suggesting a halo tax in administrations of punishment). Our analysis allows us to reconcile two ostensibly contradictory bodies of work on how organizational prestige affect audience evaluations by showing that prestige can be both a benefit and a liability, depending on whether an organization’s blameworthiness has been firmly established.
Keywords: reputation, status, employment discrimination, corporate misconduct, punishment
Suggested Citation: Suggested Citation
McDonnell, Mary-Hunter and King, Brayden, Order in the Court: The Influence of Firm Status and Reputation on the Outcomes of Employment Discrimination Suits (January 6, 2017). Available at SSRN: https://ssrn.com/abstract=2373974 or http://dx.doi.org/10.2139/ssrn.2373974