Title: Understanding the Impact of Human Trafficking and Modern Slavery Allegations on Company Performance
Abstract: Human trafficking and modern day slavery has become a global concern. In 2015, United Nations committed to eradicating human trafficking and modern slavery by 2030 by including it in three out of 17 Sustainable Development Goals. Following this, companies are now being rated and ranked for their risks and efforts to address human trafficking and modern day slavery in their practices. In this empirical multi-method study, we investigate the impact of human trafficking and modern slavery allegations on corporate performance, both operational and stock performance, in three areas; apparel, food and beverage, and information and communication technology. Utilizing web scraping, database management and propensity score matching, we collect allegations regarding human trafficking and modern day slavery in the global supply chains and compare the performance to a sample of control ﬁrms of similar size and from similar industries. Our results show that human trafficking and modern slavery allegations are negatively associated with sales, operating income and stock returns in the short term. Ethical focused corporate social responsibility can significantly reduce the financial impact. There is no association in the long term, which shows the need for better supply chain policies and laws for combatting human trafficking and modern slavery.
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