Employee Troubles Following Financial Activism: Evidence from Insider Data Leaks

Recent research reveals that financially-motivated shareholder activism can harm the pensions, safety, and job security of targeted firms’ employees. Yet, we have little understanding of how employees who remain working in targeted firms behave following these campaigns. Drawing on the shareholder activism and employee misconduct literatures, we theorize that financial activism by shareholders inclines employees who remain within their organizations to harm their employers and the activist shareholder. Integrating insights from research on the human resource benefits of corporate social responsibility, we further suggest that retained employees’ inclination to harm their employers following financial activism is weaker when firms are more socially responsible and when employees are more satisfied prior to financial activism. Using a novel dataset on insider data leaks between 2005 and 2020, we find support for our theory. We discuss implications for research on shareholder activism, data leaks, employee misconduct, and corporate social responsibility.

Zoom link: https://eur-nl.zoom.us/j/99745141934