Employee disputes and CEO turnover: Evidence from labor lawsuits

Omer Unsal, Blake Rayfield

Research output: Contribution to journalReview articlepeer-review

3 Scopus citations

Abstract

In this study, we use a unique hand-collected data set of employee lawsuits to understand the effect of litigation on CEO turnover. We gather 28,258 employee disputes (after initial court hearing) dating between the years 2000 and 2014 to test the relationship between executive turnover following employee allegations. We find increased turnover of CEOs following labor lawsuits. Additional analysis suggests that, following the lawsuits, CEO compensation decreases and becomes more sensitive to cash holding. Our results show that employee lawsuits have an impact on CEO turnover, regardless of the case outcome or motivation. Overall, we document the importance of employee treatment in the workplace. We conclude employee treatment may impact both the tenure and future job prospects of a CEO.

Original languageEnglish (US)
Pages (from-to)44-63
Number of pages20
JournalJournal of Corporate Accounting and Finance
Volume30
Issue number2
DOIs
StatePublished - Apr 2019
Externally publishedYes

Keywords

  • CEO pay
  • CEO tenure
  • labor law
  • labor litigation

ASJC Scopus subject areas

  • Accounting
  • Economics, Econometrics and Finance(all)

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