Firm-level litigation risk and CEO equity incentives

IF 6.9 2区经济学 Q1 BUSINESS, FINANCE Finance Research Letters Pub Date : 2025-03-04 DOI:10.1016/j.frl.2025.107151

Ashrafee T. Hossain , Najah Attig , Greg Hebb , Mostafa Hasan

引用次数: 0

Abstract

Using Kim and Skinner's (2012) framework, we document a positive association between firm-level litigation risk and CEOs’ equity incentives. This relationship remains robust when using an entropy-balanced sample, alternative regression specifications, a Granger causality test, and a difference-in-differences analysis leveraging Obama's election as an exogenous shock. Our results are also consistent across various restricted samples and alternative proxies for litigation risk and CEO pay. Additional tests indicate that this association is stronger (weaker) in firms with weaker (stronger) corporate governance. Furthermore, we find that the market responds more (less) favorably to risk-to-pay incentives in firms with strong (weak) governance. These findings suggest that regulators should strengthen corporate governance frameworks.

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公司层面的诉讼风险与CEO股权激励

利用Kim和Skinner（2012）的框架，我们证明了公司层面的诉讼风险与ceo股权激励之间存在正相关关系。当使用熵平衡样本、替代回归规范、格兰杰因果检验和利用奥巴马当选作为外生冲击的差异分析时，这种关系仍然是稳健的。我们的结果在各种限制样本和诉讼风险和CEO薪酬的替代代理中也是一致的。额外的测试表明，在公司治理较弱（较强）的公司中，这种关联更强（较弱）。此外，我们发现市场对强（弱）治理公司的风险支付激励的反应更（不）有利。这些发现表明，监管机构应加强公司治理框架。

本文章由计算机程序翻译，如有差异，请以英文原文为准。

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来源期刊

Finance Research Letters BUSINESS, FINANCE-

CiteScore

11.10

自引率

14.40%

发文量

863

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