Litigation risk and financial leverage

James Malm () and Marcin Krolikowski ()
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James Malm: College of Charleston
Marcin Krolikowski: Providence College

Journal of Economics and Finance, 2017, vol. 41, issue 1, No 10, 180-194

Abstract: Abstract In this paper, we use a unique hand-collected dataset on corporate litigation to examine the relationship between litigation risk and financial leverage. We find that an increase in litigation risk is associated with a significant decrease in total debt. Partitioning total debt into long-term debt and short-term debt, we find a negative relationship between litigation risk and long-term debt. There is no significant relationship between litigation risk and short-term debt.

Keywords: Litigation risk; Financial leverage; Debt maturity (search for similar items in EconPapers)
JEL-codes: G30 G32 (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (10)

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DOI: 10.1007/s12197-015-9348-0

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