Politicians’ Pet? Political Connections and Abusive Workplace Culture

In politically connected firms (PCs), employment-related offenses and workplace safety standards violations run more rampant than non-PCs. Perceived ability to avoid large-scale penalties, leveraging political connections, enables PCs to perpetuate such egregious employee treatment. Plausibly exogenous adverse (positive) shocks to political connections decrease (increase) employee mistreatments suggesting such offenses are deliberate, systematic, and strategic. PCs amplify such offenses when workers are more vulnerable. Relative to non-PC violators, weakening political ties sheds violator PCs’ market value by approximately $110 million. Relevant stakeholders appear to punish abusive firms by terminating business relations or charging higher financing costs only if violators are non-PCs