Me Too: Does Workplace Sexual Harassment Hurt Firm Value?

61 Pages Posted: 17 Aug 2019

See all articles by Shiu-Yik Au

Shiu-Yik Au

University of Manitoba - Asper School of Business

Ming Dong

York University - Schulich School of Business

Andreanne Tremblay

Université Laval - Département de Finance et Assurance

Date Written: August 14, 2019

Abstract

We investigate the impact of workplace sexual harassment on firm value. We estimate the incidence of sexual harassment in U.S. firms through textual analysis of employees’ online job reviews, and find that a high sexual harassment score leads to lower future stock returns. During 2011-2017, the value-weighted portfolio of firms in the top quantiles (top 1% to 5%) of the SH score earned a five-factor annualized alpha ranging from -8.7% to -23.6%, or an annual shareholder value loss of $1.0 billion to $2.4 billion per harassment-prone firm. We also find evidence that high sexual harassment scores are associated with sharp declines in operating profitability and increases in labor costs. These results indicate that sexual harassment has a strong damaging impact on firm value, but investors are not fully aware of the costs of sexual harassment.

Keywords: sexual harassment, firm value, stock returns, operating profitability, textual analysis

JEL Classification: J16, G34, G14

Suggested Citation

Au, Shiu-Yik and Dong, Ming and Tremblay, Andreanne, Me Too: Does Workplace Sexual Harassment Hurt Firm Value? (August 14, 2019). Available at SSRN: https://ssrn.com/abstract=3437444 or http://dx.doi.org/10.2139/ssrn.3437444

Shiu-Yik Au (Contact Author)

University of Manitoba - Asper School of Business ( email )

181 Freedman Crescent
Winnipeg, Manitoba R3T 5V4
Canada
(204) 474-9783 (Phone)

Ming Dong

York University - Schulich School of Business ( email )

4700 Keele Street
Toronto, Ontario M3J 1P3
Canada
416-736-2100 ext. 77945 (Phone)
416-736-5687 (Fax)

Andreanne Tremblay

Université Laval - Département de Finance et Assurance ( email )

Pavillon Palasis-Prince
Quebec G1K 7P4
Canada

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