A Culture of Discrimination: Evidence on the Causes and Consequences of Civil Rights Litigation Against U.S. Corporations
57 Pages Posted: 6 Jan 2022 Last revised: 28 Aug 2022
Date Written: August 22, 2022
Between 1992 and 2018, U.S. public corporations faced over 38,000 federal civil rights lawsuits. We find that the frequency of discrimination litigation varies with societal attitudes toward race and gender and intensifies after a rightward shift in local news slant. However, studying two well-established natural experiments, we find no evidence that economic forces provide a source of discipline. Consequences are small: shareholder value drops by $8.25 million, on average, around a lawsuit, with no effect on CEO turnover. We conclude that corporate discrimination is largely determined by the cultural values of employees, rather than a firm’s economic environment.
Keywords: Discrimination, culture, competition, shareholder value, CEO turnover
JEL Classification: G30, G32, J71, K31, M14
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