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
Date Written: April 22, 2018
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: Suggested Citation