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Shareholder litigation rights and labor investment efficiency

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  • Do, Trung K.
  • Le, Anh-Tuan

Abstract

This paper investigates the effect of shareholder litigation rights on labor investment efficiency. Using a difference-in-differences approach based on the staggered adoption of universal demand (UD) laws, we find that firms incorporated in states that have adopted UD laws experience lower labor investment efficiency. Furthermore, the negative association between UD law adoption and efficient labor investment is more concentrated in firms exposed to higher shareholder litigation risk ex ante and high-skilled labor firms. Our evidence is consistent with the notion of the passage of UD laws strengthens agency problems, and thus reduces labor investment efficiency.

Suggested Citation

  • Do, Trung K. & Le, Anh-Tuan, 2022. "Shareholder litigation rights and labor investment efficiency," Finance Research Letters, Elsevier, vol. 46(PA).
    • Handle: RePEc:eee:finlet:v:46:y:2022:i:pa:s1544612321003305
    DOI: 10.1016/j.frl.2021.102296
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    2. Al-Hadi, Ahmed & Habib, Ahsan, 2023. "Consequences of state-level regulations in accounting, finance, and corporate governance: A review," Advances in accounting, Elsevier, vol. 60(C).

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    More about this item

    Keywords

    Shareholder litigation rights; Universal demand laws; Labor investment efficiency;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation

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