Litigating innovation: Evidence from securities class action lawsuits

Kempf, Elisabeth ; Spalt, Oliver

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Document Type: Working paper
Year of publication: 2019
The title of a journal, publication series: ECGI Working Paper Series in Finance
Volume: 614/2019
Place of publication: Brussels
Publishing house: European Corporate Governance Institute (ECGI)
Publication language: English
Institution: Business School > ABWL, Finanzwirtschaft u. Finanzmarktinstitutionen (Spalt 2019-)
Subject: 330 Economics
Abstract: Low-quality securities class action lawsuits disproportionally target firms with valuable innovation output and impose a substantial implicit "tax" on these firms. We establish this fact using data on class action lawsuits against U.S. corporations between 1996 and 2011 and the private economic value of a firm's newly granted patents as a measure of valuable innovation output. Our results challenge the widely-held view that it is the greater failure propensity of innovative firms that drives litigation risk. Instead, our findings suggest that valuable innovation output makes a firm an attractive litigation target. More broadly, our results provide new evidence to support the view that the current class action litigation system may have adverse effects on the competitiveness of the U.S. economy.

Dieser Eintrag ist Teil der Universitätsbibliographie.

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