The Impact of Employee Lawsuits on Financial Performance: A Case Study

Author: Juliette Raymond Faculty Member: Stephanie Thomas, Department of Labor Economics Cornell University 309 Ives Hall, Ithaca, NY 14853

In the last presidential debate between incumbent Donald Trump and former Vice President Joe Biden, the candidates sparred over the purpose of the stock market. Trump asserted that a Biden win would wreak havoc on the stock market, negatively impacting Americans. In response, Biden shot back, “people don’t live off the stock market.” The Dow Jones Industrial Average had one of the best days in its history on March 24, 2020, even as the unemployment rate hiked up to 14.7% by April due to COVID-19 layoffs. As the coronavirus pandemic has proved, the labor market and the stock market are unaligned. 
My research explores this disconnect and focuses on whether employee satisfaction—as measured by employee instigated lawsuits--should be given more consideration as an indicator of a company’s long-term financial solvency. In the case of Enron, knowing the extent of employee discontent could have been a key signal for investors to divest. Months before Enron went bankrupt in December 2001, employees had been questioning the company’s ethics, suggesting that their reservations could have been early warning signs for investors. As lawsuits are a measurable indicator of employee dissatisfaction, they may be indicators of a company that is financially unstable in the long-term. 
However, discontent does not necessarily translate into a financially troubled company. In 2015, Google paid a settlement of $11 million to employees who faced age discrimination. The day after news of the settlement became public, Google stock rose by nearly 10% based on projected future earnings. Since then, Google has faced countless lawsuits by employees, yet the company keeps growing. 
I am examining highly publicized employment lawsuits in a variety of industries and stock prices over the long term. A part of my methodology will be conducting a statistical analysis to determine whether these variables are connected. 

Additional Abstract Information

Presenter: Juliette Raymond

Institution: Cornell University

Type: Poster

Subject: Economics

Status: Approved

Time and Location

Session: Poster 5
Date/Time: Tue 12:30pm-1:30pm
Session Number: 4125