Politicians’ Pet: Political Connections and Abusive Workplace Culture

Posted: 1 Aug 2022 Last revised: 13 Sep 2022

See all articles by Emdad Islam

Emdad Islam

Monash University

Blake Loriot

Monash University

Lubna Rahman

Monash University

Date Written: February 16, 2022

Abstract

In politically connected firms (PCs), employment-related offenses and workplace safety standards violations run more rampant than non-PCs. Perceived ability to avoid large-scale penalties, leveraging political connections, enables PCs to perpetuate such egregious employee treatment. Plausibly exogenous adverse (positive) shocks to political connections decrease (increase) employee mistreatments suggesting such offenses are deliberate, systematic, and strategic. PCs amplify such offenses when workers are more vulnerable. Relative to non-PC violators, weakening political ties sheds violator PCs’ market value by approximately $89 million. Relevant stakeholders appear to punish abusive firms by terminating business relations or charging higher financing costs only if violators are non-PCs.

Keywords: Abusive workplace culture, Political connections, Lobbying, Politically connected directors

JEL Classification: D72, G12, G18, J53, J81, P26

Suggested Citation

Islam, Emdad and Loriot, Blake and Rahman, Lubna, Politicians’ Pet: Political Connections and Abusive Workplace Culture (February 16, 2022). Available at SSRN: https://ssrn.com/abstract=4159459

Emdad Islam

Monash University ( email )

Wellington Road
Clayton, Victoria 3168
Australia

Blake Loriot

Monash University ( email )

23 Innovation Walk
Wellington Road
Clayton, Victoria 3800
Australia

Lubna Rahman (Contact Author)

Monash University ( email )

23 Innovation Walk
Wellington Road
Clayton, Victoria 3800
Australia

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