publication . Article . Thesis . 2015

Corporate Governance and Shareholder Litigation

George Kalchev;
Open Access
  • Published: 01 Jan 2015 Journal: SSRN Electronic Journal (eissn: 1556-5068, Copyright policy)
  • Publisher: Elsevier BV
  • Country: Canada
Firms with agency problems are more vulnerable to litigation, i.e. they are more likely to be sued. The U.S. securities laws allow shareholders to file a lawsuit against a firm when they feel that their investment in firm was misappropriated or misproperly managed by the firm’s executives. This paper examines the link between shareholder litigation and various corporate governance practices. Focusing on seasoned firms, we employ a sample of 1613 sued firms and a matching sample of 1613 non-sued firms. We find that poor corporate governance mechanism, shorter CEO tenure, lower CEO salary, and lower incentive pay in the form of restricted shares increases the prob...
free text keywords: shareholder litigation, principal components, panel logit, Business, Shareholder resolution, Shareholder, Corporate governance, Accounting, business.industry, ddc:330
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