Corporate Discrimination, Competition, and Shareholder Wealth
39 Pages Posted:
Date Written: November 19, 2021
We study novel data on the universe of employment discrimination lawsuits filed in federal court against U.S. public corporations between 1992 and 2018. Shareholder value drops by $30 million, on average, in the three days surrounding a discrimination lawsuit filing. However, we find no evidence that discrimination rates are related to product market competition, financial resources, governance, or CEO turnover. Instead, workplace discrimination is highly persistent and correlates with slow-moving proxies of firm culture, such as headquarter location. These results suggest that corporate discrimination is largely determined by the beliefs and preferences of employees, rather than a firm’s economic environment.
Keywords: Discrimination, Firm value, Competition, Corporate governance, CEO turnover
JEL Classification: G30, G32, G34, J71, K31
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