ABSTRACT
Drawing on the political theory of judicial decision making, our paper proposes a new and parsimonious ex ante litigation risk measure: federal judge ideology. We find that judge ideology ...complements existing measures of litigation risk based on industry membership and firm characteristics. Firms in liberal circuits (the third quartile in ideology) are 33.5% more likely to be sued in securities class action lawsuits than those in conservative circuits (the first quartile in ideology). This result is stronger after the U.S. Supreme Court's ruling in the Tellabs case. We next show that the effect of judge ideology on litigation risk is greater for firms with more sophisticated shareholders and with higher expected litigation costs. Furthermore, judicial appointments affect litigation risk and the value of firms in the circuit, highlighting the economic consequences of political appointments of judges. Finally, using our new measure, we document that litigation risk deters managers from providing long‐term earnings guidance, a result that existing measures of litigation risk cannot show.
Despite a longstanding debate over the pros and cons of imposing legal liability on directors and officers (D&Os), there is limited evidence on how D&O liability affects corporate innovation. We ...study this question by exploiting Nevada's 2001 corporate law change that dramatically lowered D&O legal liability and helped Nevada become the second most popular state for out-of-state incorporations. We find that firms incorporated in Nevada exhibit an increase in innovation outputs relative to matched control firms after the law change, particularly firms facing higher litigation risk or operating in more innovative industries. The results are driven mainly by exchange-listed firms that are subject to better governance than over-the-counter (OTC) listed firms. Lower D&O liability also enables firms to pursue more risky, but potentially more rewarding, explorative innovation. Therefore, although holding D&Os liable may be desirable overall, it also entails a cost by discouraging innovation in some firms. Our study has implications for how the litigation environment may influence sustainable growth via innovation.
•Firms incorporated in Nevada exhibit an increase in innovation outputs relative to matched control firms after the Nevada's 2001 corporate law change, particularly firms facing higher litigation risk or operating in more innovative industries.•Results are driven mainly by exchange-listed firms that are subject to better governance than over-the-counter (OTC) listed firms.•Lower D&O liability enables firms to pursue more risky, but potentially more rewarding, explorative innovation.
Financing the litigation arms race Antill, Samuel; Grenadier, Steven R.
Journal of financial economics,
08/2023, Letnik:
149, Številka:
2
Journal Article
Recenzirano
Using a dynamic real-option model of litigation, we show that the increasingly popular practice of third-party litigation financing has ambiguous implications for total ex-post litigant surplus. A ...defendant and a plaintiff bargain over a settlement payment. The defendant takes costly actions to avoid deadweight losses associated with large transfers to the plaintiff. Litigation financing bolsters the plaintiff, leading to larger deadweight losses. However, by endogenously deterring the defendant from taking costly actions, litigation financing can nonetheless improve the joint surplus of the plaintiff and defendant. In contrast to popular opinion, litigation financing does not necessarily encourage high-risk frivolous lawsuits.
This article explores the application of third-party litigation funding (TPLF), also referred to as commercial litigation funding, in insolvency litigation by way of a comparison of the legal ...position in Australia and South Africa. It proposes that TPLF could offer significant benefits by enabling liquidators of insolvent estates to pursue and enforce claims through civil proceedings with the aim of swelling the assets of the insolvent estate, ultimately to the advantage of the creditors. Since both jurisdictions share elements of English law, both were confronted with the English law doctrines of champerty and maintenance initially being regarded as impediments to the development and/or use of TPLF. Currently, and mainly due to developments in terms of case law, the concept of TPLF has in principle been accepted in both jurisdictions. However, in Australia the development originally transpired in the field of insolvency litigation. In South Africa the context was more in the confines of general litigation. It is submitted that the South African system could benefit by considering various aspects of the Australian system regarding the use of TPLF in insolvency litigation. It remains a question whether or not the respective systems would benefit by adopting comprehensive regulatory measures to regulate TPLF.
On March 13, 1956, ninety-nine members of the United States Congress promulgated the Declaration of Constitutional Principles, popularly known as the Southern Manifesto. Reprinted here, the Southern ...Manifesto formally stated opposition to the landmark United State Supreme Court decisionBrown v. Board of Education, and the emergent civil rights movement. This statement allowed the white South to preventBrown'simmediate full-scale implementation and, for nearly two decades, set the slothful timetable and glacial pace of public school desegregation. The Southern Manifesto also provided the Southern Congressional Delegation with the means to stymie federal voting rights legislation, so that the dismantling of Jim Crow could be managed largely on white southern terms.
In the wake of theBrowndecision that declared public school segregation unconstitutional, seminal events in the early stages of the civil rights movement--like the Emmett Till lynching, the Montgomery bus boycott, and the Autherine Lucy riots at the University of Alabama brought the struggle for black freedom to national attention. Orchestrated by United States Senator Richard Brevard Russell Jr. of Georgia, the Southern Congressional Delegation in general, and the United States Senate's Southern Caucus in particular, fought vigorously and successfully to counter the initial successes of civil rights workers and maintain Jim Crow. The South's defense of white supremacy culminated with this most notorious statement of opposition to desegregation.The Southern Manifesto: Massive Resistance and the Fight to Preserve Segregationnarrates this single worst episode of racial demagoguery in modern American political history and considers the statement's impact upon both the struggle for black freedom and the larger racial dynamics of postwar America.
Dred Scott and the Problem of Constitutional Evil , first published in 2006, concerns what is entailed by pledging allegiance to a constitutional text and tradition saturated with concessions to ...evil. The Constitution of the United States was originally understood as an effort to mediate controversies between persons who disputed fundamental values, and did not offer a vision of the good society. In order to form a 'more perfect union' with slaveholders, late-eighteenth-century citizens fashioned a constitution that plainly compelled some injustices and was silent or ambiguous on other questions of fundamental right. This constitutional relationship could survive only as long as a bisectional consensus was required to resolve all constitutional questions not settled in 1787. Dred Scott challenges persons committed to human freedom to determine whether antislavery northerners should have provided more accommodations for slavery than were constitutionally strictly necessary or risked the enormous destruction of life and property that preceded Lincoln's new birth of freedom.
The reasons for malpractice litigation in elbow surgery are not well understood. The aim of this study is to report the most frequently litigated surgeries of the elbow and analyze the reasons for ...litigation and case outcomes.
A retrospective review of the Westlaw legal database was performed, and all federal and state jurisdiction litigation cases involving the elbow from 2000-2023 were queried. Cases were excluded if they did not involve an orthopedic surgeon, nor primary elbow injury or procedure. Cases were reviewed for demographic information, surgical procedure based on reference CPT codes, complications, symptoms, and reasons for litigation. Quantitative information, including settlement and indemnity cost to the defendant orthopedic surgeon, was analyzed. Cases were sub-divided based on United States Census Bureau regions and states to assess regional frequency of litigation with ANOVA tests.
There were 59 cases meeting inclusion criteria from 2000-2023.The most litigated cases involved were ulnar nerve transposition/release and open reduction and internal fixation of the proximal radius and/or ulna at the elbow. The most litigated complication was claimed nerve damage (46%) and permanent disability (27%). Of the total cases, the most frequently litigated symptoms were nerve damage (46%) and loss of function (37%), while the least frequent was postoperative stiffness (2%). The Pacific region demonstrated the highest litigation rate (20%), while the East South Central, Mountain, and New England regions had the lowest litigation rate (3% each). A favorable verdict was given to the defendant orthopedic surgeon in 59% of the cases. The average loss incurred through settlement was $245,590, while the average indemnity paid through verdict was $523,334.
Operative fixation of the proximal ulna/radius and ulnar nerve release/transposition are the most litigated procedures of the elbow. Litigation is most associated with nerve injury. Across Census Bureau regions, there is no significant difference in monetary cost incurred through settlements and verdict losses. Although a majority of litigated cases are won by the defending orthopedic surgeon, thorough informed consent and perioperative expectation management may mitigate litigation risk.
Measuring securities litigation risk Kim, Irene; Skinner, Douglas J.
Journal of accounting & economics,
02/2012, Letnik:
53, Številka:
1-2
Journal Article
Recenzirano
Extant research commonly uses indicator variables for industry membership to proxy for securities litigation risk. We provide evidence on the construct validity of this measure by reporting on the ...predictive ability of alternative models of litigation risk. While the industry measure alone does a relatively poor job of predicting litigation, supplementing this variable with measures of firm characteristics (such as size, growth, and stock volatility) considerably improves predictive ability. Additional variables such as those that proxy for corporate governance quality and managerial opportunism do not add much to predictive ability and so do not meet the cost–benefit test for inclusion.
► Extant research commonly uses industry dummy variables to measure securities litigation risk. ► We report on the predictive ability of alternative models of litigation risk to assess the validity of these dummy variables. ► The industry measure alone does a relatively poor job of predicting litigation. ► Supplementing this variable with measures of other firm characteristics considerably improves predictive ability. ► Proxies for corporate governance quality and managerial opportunism do not add much to predictive ability.
Henry Ford is remembered in American lore as the ultimate entrepreneur-the man who invented assembly-line manufacturing and made automobiles affordable. Largely forgotten is his side career as a ...publisher of antisemitic propaganda. This is the story of Ford's ownership of theDearborn Independent, his involvement in the defamatory articles it ran, and the two Jewish lawyers, Aaron Sapiro and Louis Marshall, who each tried to stop Ford's war.
In 1927, the case of Sapiro v. Ford transfixed the nation. In order to end the embarrassing litigation, Ford apologized for the one thing he would never have lost on in court: the offense of hate speech.
Using never-before-discovered evidence from archives and private family collections, this study reveals the depth of Ford's involvement in every aspect of this case and explains why Jewish civil rights lawyers and religious leaders were deeply divided over how to handle Ford.
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