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The Texaco Racial Discrimination Case and Shareholder Wealth

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  • STEPHEN W. PRUITT
  • LEONARD L. NETHERCUTT

Abstract

We analyze the wealth effects of the Texaco racial discrimination lawsuit both on the shareholders of Texaco and its major U.S. competitors. Employing a comprehensive data set which included every case docket entry and every Wall Street Journal article on the case as an experimental stimulus, our findings suggest that the overall cost of the case to Texaco shareholders exceeded $500 million, that Texaco's tribulations had little, if any, impact on the share prices of its major competitors, and that Wall Street Journal coverage of the case was highly correlated with significant changes in Texaco stock prices. This last finding provides significant support for Hite's suppostion that newspaper editors "key" on ex post stock price changes in selecting the events to be covered in the next day's edition.

Suggested Citation

  • Stephen W. Pruitt & Leonard L. Nethercutt, 2002. "The Texaco Racial Discrimination Case and Shareholder Wealth," Journal of Labor Research, Transaction Publishers, vol. 23(4), pages 685-693, October.
    • Handle: RePEc:tra:jlabre:v:23:y:2002:i:4:p:685-693
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    Cited by:

    1. Cai, Zhengyu & Maguire, Karen & Winters, John V., 2018. "Who Benefits from Local Oil and Gas Employment? Labor Market Composition in the Oil and Gas Industry in Texas," GLO Discussion Paper Series 246, Global Labor Organization (GLO).
    2. Cai, Zhengyu & Maguire, Karen & Winters, John V., 2019. "Who benefits from local oil and gas employment? Labor market composition in the oil and gas industry in Texas and the rest of the United States," Energy Economics, Elsevier, vol. 84(C).

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