IDEAS home Printed from https://ideas.repec.org/a/bla/jfnres/v48y2025i3p1315-1349.html
   My bibliography  Save this article

Unintended consequences of discrimination litigation caps

Author

Listed:
  • Spencer Barnes

Abstract

On July 14, 1992, the U.S. Equal Employment Opportunity Commission (EEOC) implemented a policy that caps punitive damage payouts from discrimination litigation at different employee counts allowing for a “difference‐in‐discontinuities” design. I find that these kink points incentivize firms to restrict their number of employees, which reduces their maximum discrimination litigation exposure to between 40% and 60% of their yearly median revenues. In turn, firm growth decreases for firms below these EEOC thresholds after the implementation of the policy. These firms reduce financing and are not motivated to decrease growth by relative changes in cash flows from discrimination risk exposure.

Suggested Citation

  • Spencer Barnes, 2025. "Unintended consequences of discrimination litigation caps," Journal of Financial Research, Southern Finance Association;Southwestern Finance Association, vol. 48(3), pages 1315-1349, September.
    • Handle: RePEc:bla:jfnres:v:48:y:2025:i:3:p:1315-1349
    DOI: 10.1111/jfir.12443
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/jfir.12443
    Download Restriction: no
    File URL: https://libkey.io/10.1111/jfir.12443?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:jfnres:v:48:y:2025:i:3:p:1315-1349. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://edirc.repec.org/data/sfaaaea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.