How Much Does Workplace Sexual Harassment Hurt Firm Value?
67 Pages Posted: 17 Aug 2019 Last revised: 5 Jun 2020
Date Written: June 4, 2020
We investigate the impact of workplace sexual harassment on firm value by estimating the incidence of sexual harassment (SH) through textual analysis of 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 –8.4% to –21.2%, representing an annual shareholder value loss of $0.9 to $2.2 billion per harassment-prone firm. High SH scores are also associated with sharp declines in operating profitability and increases in labor costs. These results indicate that sexual harassment has a highly detrimental effect on firm value.
Keywords: sexual harassment, firm value, stock returns, operating profitability, environmental, social, and governance (ESG)
JEL Classification: J16, G34, G14
Suggested Citation: Suggested Citation