How Much Does Workplace Sexual Harassment Hurt Firm Value?

Journal of Business Ethics 190 (4):861-883 (2023)
  Copy   BIBTEX

Abstract

It is widely recognized that workplace sexual harassment has significant negative psychological and personal consequences, and employees facing harassment suffer reductions in productivity. Our contribution is to propose a novel measure of workplace sexual harassment risk and provide a fuller estimation of the firm value impact of sexual harassment. In contrast to recent studies that focus on short-run market reactions to media announcements of harassment scandals, we use employee job reviews to identify low-profile harassment incidents that better reflect the pervasive, toxic environment pertaining to sexual harassment than do newsworthy scandals, and we measure the longer-term effect on firm value starting from the date when harassment risk affects employee morale. We identify firm harassment risk by analyzing employee job reviews and estimate the sexual harassment score (SH) through textual analysis of online job reviews. Our sample of high-SH firms, or firms with unusually high-SH scores, exhibits significant reductions in future stock performance and profitability. For example, firms with a top 2% SH score earn a value-weighted risk-adjusted stock return of − 17% in the 1-year period after high-SH classification, and this damage is concentrated in firms with higher investor attention. Furthermore, high-SH firms experience a decline in operating profitability and an increase in labor costs during a 5-year period around high-SH classification. Our evidence suggests that sexual harassment can cause greater damages to firm value than previously documented.

Links

PhilArchive



    Upload a copy of this work     Papers currently archived: 92,261

External links

Setup an account with your affiliations in order to access resources via your University's proxy server

Through your library

Similar books and articles

On the persistence of sexual harassment in the workplace.S. Gayle Baugh - 1997 - Journal of Business Ethics 16 (9):899-908.
Can sexual harassment be salvaged?M. J. Booker - 1998 - Journal of Business Ethics 17 (11):1171-1177.
V Chemnitz East Forum 21–23 March 2001 "Human Resource Management in Transition".[author unknown] - 2000 - Journal of Business Ethics 26 (4):363-364.
Ethical Issues in Business: Perspectives from the Business Academic Community.[author unknown] - 2004 - Journal of Business Ethics 52 (2):141-141.
Sexual harassment in the public accounting profession?Brian B. Stanko & Mark Schneider - 1999 - Journal of Business Ethics 18 (2):185 - 200.
The Debate Over the Prohibition of Romance in the Workplace.C. Boyd - 2010 - Journal of Business Ethics 97 (2):325 - 338.

Analytics

Added to PP
2023-02-02

Downloads
18 (#836,872)

6 months
15 (#171,570)

Historical graph of downloads
How can I increase my downloads?

Citations of this work

No citations found.

Add more citations