Corporate Lobbying and Labor Relations: Evidence from Employee-Level Litigations

Posted: 31 May 2019

See all articles by Omer Unsal

Omer Unsal

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

M. Kabir Hassan

University of New Orleans - College of Business Administration - Department of Economics and Finance

Duygu Zirek

University of New Orleans - College of Business Administration - Department of Economics and Finance

Date Written: March 13, 2017

Abstract

In this study, we analyze employee litigation and other work-related complaints to examine if the judicial process favors firms that engage in lobbying. We gather data for 27,794 employee lawsuits (after their initial court hearings) filed between 2000 and 2014 and test the relationship between employee allegations and firms' lobbying strategies. We find that employee litigation increases the number of labor-related bills in our sample. We document that an increase in employee lawsuits may drive firms into lobbying to change policy proposals. We also find robust evidence that case outcomes are different for lobbying firms compared to non-lobbying rivals, which may protect shareholder wealth in the long run. Our results suggest lobbying activities may make a significant difference in the effects of employee lawsuits. Our findings highlight the benefit of building political capital to obtain biased outcomes in favor of politically connected firms.

Keywords: Lobbying, Employee relation, Employee litigation, Firm performance

JEL Classification: D72, J52, J53, L25

Suggested Citation

Unsal, Omer and Hassan, M. Kabir and Zirek, Duygu, Corporate Lobbying and Labor Relations: Evidence from Employee-Level Litigations (March 13, 2017). Journal of Corporate Finance, Vol. 46, No. 411-441, 2017, Available at SSRN: https://ssrn.com/abstract=3384822

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

M. Kabir Hassan

University of New Orleans - College of Business Administration - Department of Economics and Finance ( email )

2000 Lakeshore Drive
New Orleans, LA 70148
United States

Duygu Zirek

University of New Orleans - College of Business Administration - Department of Economics and Finance ( email )

2000 Lakeshore Drive
New Orleans, LA 70148
United States

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