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Corporate lobbying and labor relations: Evidence from employee-level litigations

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  • Unsal, Omer
  • Kabir Hassan, M.
  • Zirek, Duygu

Abstract

In this study, we analyze employee litigation and other work-related complaints to examine if the judicial process favors firms that engage in lobbying. We gather data for 27,794 employee lawsuits (after their initial court hearings) filed between 2000 and 2014 and test the relationship between employee allegations and firms' lobbying strategies. We find that employee litigation increases the number of labor-related bills in our sample. We document that an increase in employee lawsuits may drive firms into lobbying to change policy proposals. We also find robust evidence that case outcomes are different for lobbying firms compared to non-lobbying rivals, which may protect shareholder wealth in the long run. Our results suggest lobbying activities may make a significant difference in the effects of employee lawsuits. Our findings highlight the benefit of building political capital to obtain biased outcomes in favor of politically connected firms.

Suggested Citation

  • Unsal, Omer & Kabir Hassan, M. & Zirek, Duygu, 2017. "Corporate lobbying and labor relations: Evidence from employee-level litigations," Journal of Corporate Finance, Elsevier, vol. 46(C), pages 411-441.
    • Handle: RePEc:eee:corfin:v:46:y:2017:i:c:p:411-441
    DOI: 10.1016/j.jcorpfin.2017.08.005
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    More about this item

    Keywords

    Lobbying; Employee relation; Employee litigation; Firm performance;
    All these keywords.

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • J52 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Dispute Resolution: Strikes, Arbitration, and Mediation
    • J53 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Labor-Management Relations; Industrial Jurisprudence
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance

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