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Shareholder litigation and workplace safety

Author

Listed:
  • Gong, Ning
  • Guo, Lixiong
  • Wang, Zhiyan

Abstract

Using the staggered adoption of Universal Demand (UD) laws at the state level that increased the hurdle of shareholder derivative suits as a shock, we find that reduced litigation threat increases workplace injury rates. The effect is more pronounced for treated firms facing higher litigation risk, less product market competition, in low union coverage industries, and with Employee Stock Ownership Plans (ESOPs). Treated firms with high ownership by “dedicated” or local institutional investors are less affected as these investors can monitor safety through voice and exit. Safety inputs fall in treated firms following the adoption of UD laws. Overall, the findings suggest that shareholder litigation threat plays a critical role in workplace safety.

Suggested Citation

  • Gong, Ning & Guo, Lixiong & Wang, Zhiyan, 2023. "Shareholder litigation and workplace safety," Journal of Corporate Finance, Elsevier, vol. 82(C).
    • Handle: RePEc:eee:corfin:v:82:y:2023:i:c:s0929119923001165
    DOI: 10.1016/j.jcorpfin.2023.102467
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    References listed on IDEAS

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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Workplace safety; Shareholder litigation; Universal demand law; ESG; Corporate governance;
    All these keywords.

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • J28 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Safety; Job Satisfaction; Related Public Policy
    • K22 - Law and Economics - - Regulation and Business Law - - - Business and Securities Law

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