财务、会计seminar 第一百三十五期讲座

题目:Federal Judge Ideology: A New Measure of Ex-Ante Litigation  Risk

演讲者:Allen Huang

        Assistant Professor

Hong Kong University of Science and Technology

时间:20161111日(周五)上午 1000 - 11:30

地点:嘉庚一207

主持人:郑祯  助理教授

参  加 者:对会计、财务研究有兴趣的师生

简介:Following the political theory of judicial decision-making, our paper  proposes a parsimonious ex-ante litigation risk measure: federal court judge  ideology. We find that judge ideology complements existing measures of  litigation risks based on industry membership and firm characteristics, and  provides incremental explanatory power in predicting litigation occurrence and  outcomes. Firms in more liberal circuits are more likely to be sued. This effect  is stronger for firms with more sophisticated leading plaintiffs and higher  expected litigation payoffs, as well as for lawsuits without specific  allegations. Next, we show that lawsuits filed in more liberal circuits are less  likely to be dismissed and result in higher settlement amounts. Using judge  departures as exogenous shocks to court ideology, we find that liberal changes  increase the likelihood of lawsuit filings and that the market reacts negatively  to the departures. Finally, using the new measure, we document that litigation  risk deters managers from providing long-term earnings guidance, which existing  measures cannot explain.

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