The dark side of weakening shareholder litigation rights: Evidence from green patenting activities

William Mbanyele and Linda T Muchenje

Finance Research Letters, 2022, vol. 47, issue PB

Abstract: Exploiting the staggered adoption of universal demand (UD) laws as a quasi-natural experiment and the difference in difference approach, we find that US firms in states that adopted UD laws reduced their green innovation output and quality relative to their counterparts. Moreover, the causal relationship is more pronounced for firms that had better external governance before the adoption of UD laws. We also document that firms’ information asymmetry dramatically increases after UD laws enforcement. Overall, our study reveals the negative consequences of weakening shareholder rights on social welfare outcomes like environmental innovation productivity.

Keywords: Shareholder litigation; Green innovation; Climate risk. managerial entrenchment (search for similar items in EconPapers)
JEL-codes: G23 G31 G38 K22 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:47:y:2022:i:pb:s1544612322000927

DOI: 10.1016/j.frl.2022.102779

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