#MeToo: Sexual Harassment and Company Value

We identify the impact of reported sexual harassment on firm value through the use of a unique hand-collected sample consisting of around 200 incidents that all include novel event- and firm-specific characteristics. The average effect of a sexual harassment scandal is significantly negative and robust, with around 1.5% abnormal decrease in market value over the event day and the following trading day. In the cross section, the effect is considerably amplified by the involvement of a CEO in the scandal, high news coverage and number of accusers, while firms' self-disclosure of misconduct mitigates the effect. The average magnitude of impact is unchanged before and after the #MeToo movement, but the frequency of scandals in the media translates to a four-fold increase in the risk of becoming embroiled in a scandal. Proxies of public sentiment rather than direct penalties and loss of productivity are found to correlate with the magnitude of impact.