Just Friends? Managers' Connections to Judges

• 成果类型: Article
• 署名作者: Huang, Sterling; Roychowdhury, Sugata; Sletten, Ewa; Xu, Yanping
• 署名单位: New York University; NYU Shanghai; Northwestern University; University System of Ohio; Ohio State University; Sun Yat Sen University
• 刊物名称: JOURNAL OF ACCOUNTING RESEARCH
• ISSN/ISSBN: 0021-8456
• DOI: 10.1111/1475-679X.12563
• 发表日期: 2025
• 页码: 461-502
• 关键词: securities class-actions; social ties; Investor protection; LEGAL; IMPACT; determinants; DISCLOSURES; PUNISHMENT; STANDARDS; members

摘要

We study the impact of social connections between judges and executives on the outcomes of Securities Class Action Litigation (SCAL). Judges who are socially connected to a firm's executives are significantly more likely to dismiss lawsuits against the firm. There is also evidence of faster resolution and lower payout amounts in connected cases. The favorable outcomes cannot be explained by the lower severity of connected cases, or by court, judge, or firm characteristics. Our results are more pronounced when executives connected to the judge are named defendants in the lawsuits, when connected cases involve less visible lawsuits or firms, and when connections between judges and executives are likely more direct. Our evidence indicates that social connections influence judge impartiality and meaningfully alter SCAL outcomes.