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CEO social capital and litigation risk

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  • Zhang, Lu
  • Peng, Fei
  • Shan, Yuan George
  • Chen, Yiping

Abstract

We examine the association between chief executive officer (CEO) social capital and firm litigation risk. Employing a sample of Chinese listed firms from 2008 to 2017, we find that firms with high CEO social capital relate to lower litigation risk. Further analyses show that the negative correlation only exists for firms that are non-state-owned enterprises, are located in low-marketized regions, face periods of economic downturns, have high managerial ownership, and retain well-connected independent directors on boards. Our results hold after a battery of robustness checks. Together, these findings provide unique evidence to support the beneficial role of CEO social capital in risk reduction.

Suggested Citation

  • Zhang, Lu & Peng, Fei & Shan, Yuan George & Chen, Yiping, 2023. "CEO social capital and litigation risk," Finance Research Letters, Elsevier, vol. 51(C).
    • Handle: RePEc:eee:finlet:v:51:y:2023:i:c:s1544612322005827
    DOI: 10.1016/j.frl.2022.103405
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    2. Huanan Sun & Lianmei Zhu & Anqi Wang & Shali Wang & Haijing Ma, 2022. "Analysis of Regional Social Capital, Enterprise Green Innovation and Green Total Factor Productivity—Based on Chinese A-Share Listed Companies from 2011 to 2019," Sustainability, MDPI, vol. 15(1), pages 1-21, December.
    3. Shi, Huaizhi, 2024. "Managerial ownership and labor income share," Finance Research Letters, Elsevier, vol. 62(PB).
    4. Guo, Heng, 2023. "Enterprise litigation risk and risk taking," Finance Research Letters, Elsevier, vol. 58(PA).
    5. Shan, Yuan George & Wang, Yirui & Wu, Wuqing & Zhen, Weihao, 2023. "Does the Achilles heel of guarantee networks drive financial distress?," International Review of Financial Analysis, Elsevier, vol. 87(C).
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    More about this item

    Keywords

    CEO social capital; Litigation risk; Network centrality;
    All these keywords.

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G41 - Financial Economics - - Behavioral Finance - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making in Financial Markets

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