An empirical assessment of employment‐at‐will: a tale of two states

Abstract

The market’s reactions to six decisions that dealt with the employment‐at‐will doctrine were examined with event study methodology. Three hypotheses were tested, all three of which were supported clearly by the data. Shareholder returns to a sample of California firms fell in response to the three California decisions that provided at‐will employees with causes of action to challenge their discharges; returns to those same firms rose in response to the Foley decision, which cut back on the employment‐at‐will erosions in California; and, returns to a sample of firms in New York rose in response to the two decisions from New York that affirmed the supremacy of the employment‐at‐will doctrine in New York. These results support the view that employment‐at‐will is beneficial for employers and that erosions to that doctrine are costly to employers.

Citation

Abraham, S.E. (2004), "An empirical assessment of employment‐at‐will: a tale of two states", Managerial Law, Vol. 46 No. 6, pp. 3-19. https://doi.org/10.1108/03090550410771026