On 23 September, a session of the ISEG Research Seminars will take place from 13.00 to 14.00. The guest speaker will be Sinh Thoi Mai at ISEG. This session will take place in Amphitheater 4 (Quelhas Building, 4th floor).
The ISEG Research Seminars are held every week on Wednesdays, with the participation of professors from ISEG, as well as from other Portuguese and international educational institutions.
Title
The Effects of Misalignment in a Culture of Respect and Litigation Risk
Abstract
We examine how the misalignment between the culture of respect articulated by CEOs and the culture of respect experienced by employees increases firms’ exposure to workplace-related litigation. Using a novel text-based measure derived from earnings conference call transcripts and Glassdoor employee reviews, we construct a measure of CEO-employee respect culture misalignment at the firm level from 2007 to 2022. We find that greater misalignment in the culture of respect is associated with a higher likelihood of employment-related litigation, a greater number of litigation cases, and larger monetary penalties. In addition, misalignment in the culture of respect is associated with higher employee turnover—both voluntary and involuntary—and a greater likelihood of labor strikes. We further identify several drivers of this misalignment, showing that it is higher in firms with more narcissistic CEOs, weaker internal communication, shorter CEO tenure, and forced CEO turnover.
