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Wrongful Discharge Laws and Innovation

Viral V. Acharya, Ramin P. Baghai and Krishnamurthy V. Subramanian.

in The Review of Financial Studies

January 2014; p ublished online April 2013 .

Journal Article. Subjects: International Finance; Corporate Governance; Labour-Management Relations, Trade Unions, and Collective Bargaining; Labour Standards: National and International; Employment and Labour Law. 21505 words.

We show that wrongful discharge laws—laws that protect employees against unjust dismissal—spur innovation and new firm creation. Wrongful discharge laws, particularly those that prohibit...