Employee Relations And Firm Risk: Evidence from Court Rooms

Research in International Business and Finance, Volume 48, April 2019, Pages 1-16

Posted: 31 May 2019

See all articles by Omer Unsal

Omer Unsal

Merrimack College - Girard School of Business - Department of Accounting and Finance

Date Written: April 22, 2018

Abstract

In this study, we examine the relation between employee lawsuit and risk in U.S. public firms. We hand collect more than 20,000 employee lawsuits and find that labor-related allegations significantly affect firm risk after controlling for various firm characteristics. We document that a greater number of employee litigation increases firm risk. Our results remain robust when we use alternative measures of employee lawsuits, including other work-related complaints, violations, disputes, and allegations. Our study reveals that case characteristics - charging parties, outcomes, and duration - play a significant role in defining the firm risk. Our results show the importance of employee treatment which may have important implications for policy makers and business owners.

Keywords: Litigation, Employee rights, Risk reduction, Firm performance, Labor force

JEL Classification: K31, K41, E25, J21

Suggested Citation

Unsal, Omer, Employee Relations And Firm Risk: Evidence from Court Rooms (April 22, 2018). Research in International Business and Finance, Volume 48, April 2019, Pages 1-16, Available at SSRN: https://ssrn.com/abstract=3384815

Omer Unsal (Contact Author)

Merrimack College - Girard School of Business - Department of Accounting and Finance ( email )

315 Turnpike St
North Andover, MA 01845
United States

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