Tirimba Obonyo, Creighton University, U.S.A.
Sijing Wei, Creighton University, U.S.A.
John R. Wingender, Jr., Creighton University, U.S.A.

Published in

Volume 23, Issue 1, p20-31, October 2023


Paid maternity leave is a voluntary corporate decision. Its Cost-Benefit Analysis is presented by Obonyo et al. (2021). “The benefit is to help retain competent employees, to increase corporate morale and to benefit employee and business operations. There is an obvious cost to employees taking off work with pay for delivering and caring for their newborns or newly adopted children. The question is whether investors consider the policy of paid maternity leave as a positive net present value investment for long-term shareholder wealth maximization or as an expense.” This study is the first research to examine the stock price reaction to the announcement that a firm will initiate paid maternity leave benefits. We use a list of companies collected by the website (2019) with data for companies that offer paid maternity leave. Using an event study model, the Day 0 abnormal return is a highly statistically significant negative -.51%. In addition, all the CARs around the event date are statistically significantly negative. By contrast, regression results indicate that voluntary paid maternity leave programs that are longer in length have better results for firm value. Thus, the findings of this research indicate that longer the term of the paid maternity leave policy (more investment in employees), the more positively it impacts firm value.


Maternity Leave; Event Study; Firm Value

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