How shareholder litigation risk influences firm orientation toward stakeholders

• 成果类型: Article
• 署名作者: Park, Eunyoung; Lange, Donald; Jeon, Chunhu
• 署名单位: Hong Kong University of Science & Technology; Arizona State University; Arizona State University-Tempe; Morgan State University
• 刊物名称: STRATEGIC MANAGEMENT JOURNAL
• ISSN/ISSBN: 0143-2095
• DOI: 10.1002/smj.3689
• 发表日期: 2025
• 页码: 1149-1182
• 关键词: CORPORATE GOVERNANCE; Corporate social responsibility; difference-in-differences; SHAREHOLDER LITIGATION; Stakeholder theory

摘要

Research SummaryThis study examines whether U.S. corporate executives would adopt a stronger stakeholder orientation if constraints imposed by shareholder litigation risk were relaxed. Leveraging the staggered adoption of Universal Demand (UD) laws across states as a quasi-experimental setting, we test whether reduced litigation risk leads to managers prioritizing broader stakeholder initiatives. We find that firms increase stakeholder-focused efforts following UD law adoption, with this shift more pronounced in firms with weaker shareholder governance provisions and lower levels of outside director ownership. Our study advances corporate governance and stakeholder theory by demonstrating how shareholder litigation risk acts as a governance mechanism that shapes managerial priorities. Additionally, we identify key boundary conditions moderating the relationship between governance constraints and stakeholder engagement.Managerial SummaryWhat happens when corporate executives feel less constrained by the risk of shareholder litigation? This study examines how reducing litigation risk leads to managers shifting their focus toward initiatives that benefit broader stakeholder groups, including employees, communities, and the environment. Using state-level legal changes as a natural experiment, we find that firms adopt a more stakeholder-oriented approach when shareholder litigation risk decreases-particularly in firms with weaker governance mechanisms tied to shareholder oversight. These findings highlight the critical role of legal frameworks and governance structures in shaping how executives balance shareholder and stakeholder priorities. For practitioners, this underscores the function of governance systems in influencing a firm's stakeholder strategy.