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Attracting the sharks: Corporate innovation and securities class action lawsuits
Kempf, Elisabeth
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Spalt, Oliver
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DOI:
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https://doi.org/10.1287/mnsc.2022.4388
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URL:
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https://pubsonline.informs.org/doi/10.1287/mnsc.20...
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Document Type:
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Article
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Year of publication:
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2023
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The title of a journal, publication series:
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Management Science
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Volume:
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69
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Issue number:
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3
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Page range:
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1805-1834
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Place of publication:
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Cantonsville, MD
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Publishing house:
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INFORMS
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ISSN:
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0025-1909 , 1526-5501
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Publication language:
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English
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Institution:
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Business School > ABWL, Finanzwirtschaft u. Finanzmarktinstitutionen (Spalt 2019-)
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Subject:
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330 Economics
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Classification:
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JEL:
G38,
K22,
K41,
O31,
O32,
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Keywords (English):
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corporate governance , law and economics , innovation , patents , shareholder litigation , class action lawsuit
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Abstract:
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This paper provides novel evidence suggesting that securities class action lawsuits, a central pillar of the U.S. litigation and corporate governance system, can constitute an obstacle to valuable corporate innovation. We first establish that valuable innovation output makes firms particularly vulnerable to costly low-quality class action litigation. Exploiting judge turnover in federal courts, we then show that changes in class action litigation risk affect the value and number of patents filed, suggesting firms take into account that risk in their innovation decisions. Our results challenge the widely held view that greater failure propensity
of innovative firms drives their litigation risk.
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 | Dieser Eintrag ist Teil der Universitätsbibliographie. |
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