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- Title
Defendant Firms and Response to Legal Crises: Effect on Shareholder Value.
- Authors
Jang, Woan‐Yuh; Chen, Chien‐Tzung
- Abstract
This paper examines links between institutional responses to legal crises and shareholder valuation. It explores whether the defendant firm's market performance upon the announcement of a filing varies according to the crisis response strategies applied. It also investigates the relationship between the legal issue and the type of crisis response strategy. It examines whether the type of legal issue affects the relationship between the use of crisis response strategies and the firm's performance upon the announcement of a filing. The findings indicate that using nonexistence and distance strategies instead of no response may mitigate negative market response. However, when firms face corporate governance suits, whether or not they implemented crisis response strategies has a significantly negative impact on firm value.
- Subjects
CRISIS management research; CORPORATE corruption laws; CORPORATE governance; VALUATION; STOCKHOLDERS
- Publication
Journal of Contingencies & Crisis Management, 2009, Vol 17, Issue 2, p108
- ISSN
0966-0879
- Publication type
Article
- DOI
10.1111/j.1468-5973.2009.00570.x