Litigation risk and investment policy

James Malm (), Hari P. Adhikari (), Marcin Krolikowski () and Nilesh Sah ()
Additional contact information
James Malm: College of Charleston
Hari P. Adhikari: Embry-Riddle Aeronautical University
Marcin Krolikowski: Providence College
Nilesh Sah: University of Wisconsin - Green Bay

Journal of Economics and Finance, 2017, vol. 41, issue 4, No 11, 829-840

Abstract: Abstract We use a unique hand-collected dataset on corporate litigation to empirically examine the relationship between litigation risk and investment policy. We document a positive relationship between litigation risk and total investments. Decomposing total investments into capital expenditure, and research and development expense, we find a positive relationship between litigation risk and capital expenditure. We also find a positive relationship between litigation risk and research and development expense. The results are robust to different measures of litigation risk.

Keywords: Litigation risk; Capital expenditure; Research and development expense; Total investments (search for similar items in EconPapers)
JEL-codes: G30 G34 (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (3)

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DOI: 10.1007/s12197-016-9382-6

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