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- Title
Shareholder Litigation and Corporate Social Responsibility.
- Authors
Freund, Steven; Nguyen, Nam H.; Phan, Hieu V.
- Abstract
This research examines the relation between shareholder litigation and corporate social responsibility (CSR). Exploiting exogenous changes in shareholder litigation rights following the staggered adoption of universal demand laws by U.S. states and the Ninth Circuit Court of Appeals' ruling on securities class action lawsuits, we show that weaker shareholder litigation rights lead to lower CSR scores. Moreover, the relation is stronger for firms facing higher litigation risk, and a decreased CSR score enhances firm value. Our evidence suggests that firms engage in CSR activities partly to reduce shareholder litigation risk ex ante and mitigate its consequences ex post.
- Subjects
LEGAL status of stockholders; SOCIAL responsibility of business; ACTIONS &; defenses (Law); RISK; STATE laws; RATE of return on stocks; DIVIDENDS; UNITED States. Court of Appeals (9th Circuit)
- Publication
Journal of Financial & Quantitative Analysis, 2023, Vol 58, Issue 2, p512
- ISSN
0022-1090
- Publication type
Article
- DOI
10.1017/S002210902200031X