Correction to: Corporate governance and employee treatment: Evidence from takeover defenses (Journal of Economics and Finance, (2020), 44, 2, (361-391), 10.1007/s12197-019-09478-4)

Omer Unsal, Blake Rayfield

Research output: Contribution to journalComment/debatepeer-review

Abstract

This study investigates if antitakeover provisions are a value-enhancing indicator of corporate governance by estimating the effect of takeover susceptibility to labor litigations. Using a unique hand-collected dataset of employee lawsuits, we find a positive relationship between employee litigation and takeover protection. We document that employee lawsuits increase a firm’s susceptibility to a hostile takeover. In addition, we document that higher costs of litigation, measured by fees and case duration, increase the firms’ suitability to takeover. Our results indicate that takeover protections may decrease corporate attention to employees. This effect may be because entrenched managers may avoid long-term investment in stakeholders and enjoy “the quiet life” following the reduced threat of a hostile takeover.

Original languageEnglish (US)
Pages (from-to)392-416
Number of pages25
JournalJournal of Economics and Finance
Volume44
Issue number2
DOIs
StatePublished - Apr 1 2020
Externally publishedYes

Keywords

  • Corporate governance
  • Employee lawsuits
  • G30
  • G34
  • Hostile takeovers
  • K31
  • K41
  • Managerial entrenchment

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics

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