Me Too: Does Workplace Sexual Harassment Hurt Firm Value?
65 Pages Posted: 17 Aug 2019 Last revised: 13 Nov 2019
Date Written: November 11, 2019
We investigate the impact of workplace sexual harassment on firm value by estimating the incidence of sexual harassment (SH) through textual analysis of employees’ online job reviews. 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-$2.4 billion per harassment-prone firm. High sexual harassment scores are also 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.
Keywords: sexual harassment, firm value, stock returns, operating profitability, textual analysis
JEL Classification: J16, G34, G14
Suggested Citation: Suggested Citation