Politicians’ Pet: Political Connections and Abusive Workplace Culture
Posted: 1 Aug 2022 Last revised: 13 Sep 2022
Date Written: February 16, 2022
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: Suggested Citation