Managerial opportunism during corporate litigation

• 成果类型: Article
• 署名作者: Haslem, B
• 署名单位: State University System of Florida; Florida State University
• 刊物名称: JOURNAL OF FINANCE
• ISSN/ISSBN: 0022-1082
• DOI: 10.1111/j.1540-6261.2005.00786.x
• 发表日期: 2005
• 页码: 2013-2041
• 关键词: MARKET VALUATION; BOARD COMPOSITION; AGENCY COSTS; OWNERSHIP; firm; COMPENSATION; DIRECTORS

摘要

Using a large sample of litigation events involving publicly listed defendants, we document a surprising fact. The resolution of litigation through a court's decision dominates settlement of litigation from the shareholders' point of view, even when the firm loses. We develop a model using agency costs within the firm to explain why the market views settlement as a negative outcome on average and find empirical evidence supporting the implications of the model. Specifically, firms with weak corporate governance settle litigation more quickly, and the market reacts more negatively to settlements involving firms with higher agency costs.