In response to several public events, particularly the #MeToo movement, several US states passed anti-harassment laws against contractual provisions preventing a party from disclosing “factual information” related to sexual assaults or harassment. We argue that these legislative changes create safer workplace environments that enhance employee productivity and firm performance. To test our hypotheses, we use event studies and a difference-in-differences framework based on the staggered enactment of anti-harassment laws across 13 US states between 2018 and 2020. Our results show that the stocks of treated firms outperform the stocks of the control group by around 10% over a two-year period. Treated firms with at least one female executive are less impacted (but still better off than the control group) as such firms are more likely to feature a safer workplace environment. We attribute higher stock returns to reduced workplace harassment, improved labor productivity and enhanced firm reputation.
Canil et al. (Mon,) studied this question.