Corporate litigation and changes in CEO reputation: guidance from U.S. Federal Court lawsuits

Chelsea Liu; Joseph Aharony; Grant Richardson; Alfred Yawson

doi:10.1016/j.jcae.2016.02.003

Corporate litigation and changes in CEO reputation: guidance from U.S. Federal Court lawsuits

Chelsea Liu^*, Joseph Aharony, Grant Richardson, Alfred Yawson

^*Corresponding author for this work

Research output: Contribution to journal › Article › peer-review

14 Citations (Scopus)

Abstract

This study examines corporate litigation and changes in CEO reputation. Based on a sample of 9959 filed and settled environmental, antitrust, intellectual property (IP) and contractual lawsuits in the U.S. Federal Courts over the 2000-2007 period, we find that CEOs experience poorer reemployment prospects following contractual lawsuits. Additionally, reputational consequences depend significantly on the nature of the allegation and lawsuit merit. We also observe that IP lawsuits are associated with an increase in the number of outside board seats; no penalties follow politically sensitive environmental lawsuits. Overall, our findings contribute to the extant literature on market-based penalties for corporate wrongdoing.

Original language	English
Pages (from-to)	15-34
Number of pages	20
Journal	Journal of Contemporary Accounting and Economics
Volume	12
Issue number	1
DOIs	https://doi.org/10.1016/j.jcae.2016.02.003
Publication status	Published - Apr 2016
Externally published	Yes

Keywords

executive reputation
corporate litigation
corporate governance
executive labor market
lawsuits

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10.1016/j.jcae.2016.02.003

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abstract = "This study examines corporate litigation and changes in CEO reputation. Based on a sample of 9959 filed and settled environmental, antitrust, intellectual property (IP) and contractual lawsuits in the U.S. Federal Courts over the 2000-2007 period, we find that CEOs experience poorer reemployment prospects following contractual lawsuits. Additionally, reputational consequences depend significantly on the nature of the allegation and lawsuit merit. We also observe that IP lawsuits are associated with an increase in the number of outside board seats; no penalties follow politically sensitive environmental lawsuits. Overall, our findings contribute to the extant literature on market-based penalties for corporate wrongdoing.",

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AB - This study examines corporate litigation and changes in CEO reputation. Based on a sample of 9959 filed and settled environmental, antitrust, intellectual property (IP) and contractual lawsuits in the U.S. Federal Courts over the 2000-2007 period, we find that CEOs experience poorer reemployment prospects following contractual lawsuits. Additionally, reputational consequences depend significantly on the nature of the allegation and lawsuit merit. We also observe that IP lawsuits are associated with an increase in the number of outside board seats; no penalties follow politically sensitive environmental lawsuits. Overall, our findings contribute to the extant literature on market-based penalties for corporate wrongdoing.

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Corporate litigation and changes in CEO reputation: guidance from U.S. Federal Court lawsuits

Abstract

Keywords

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