Abstract

We investigate firms that fired the CEOs who are accused of sexual harassment and make this information public instead of entering into Non Disclosure Agreement (NDA), and we find that sexual harassment of CEOs have no significant influence on firm and firms do not suffer from the negative market reactions and long-term consequences. Contrary to precious literature suggesting the firm should enter into Non Disclosure Agreement because of its negative effects on firm, we believe that firing the accused CEO will not negatively affect firm and director should have more incentive to dismiss them instead of entering into NDA with victims. For CEOs who engaged in this event suffer the consequence from the labour market, because majority of them cannot obtain an equivalent job in job market as shown in our results. In very few cases they do, they are not hired by public firms. Moreover, we also find that the directors who made the dismissal decision of CEO did not suffer from the consequences and the number of employees was not affected by this event in 3 years either.