The old guard: CEO age and corporate litigation

James Malm, Hari P. Adhikari, Marcin W. Krolikowski and Nilesh B. Sah

Journal of Behavioral and Experimental Finance, 2021, vol. 31, issue C

Abstract: Recent studies have indicated that older Chief Executive Officers (CEOs) tend to be more capable, ethical, and risk-averse as compared to their younger counterparts. Keeping this in mind, we use a unique hand-collected data on corporate lawsuits to examine whether CEO age influences corporate litigation. After controlling for several important variables and employing several estimation techniques, we find that firms with older CEOs face fewer lawsuits. The results continue to hold when we decompose lawsuits into securities and non-securities lawsuits. Decomposing the sample firms into high-tech and labor-intensive firms, we find the negative relationship between CEO age and corporate litigation to be more pronounced in labor-intensive firms. Our results are especially relevant in the post-SOX regulation period suggesting that older CEOs enforce regulations and reduce litigation risks for their firms. Overall, our results uncover an important channel through which firms can mitigate corporate litigation, namely older CEOs.

Keywords: CEO age; Corporate litigation (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (7)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:beexfi:v:31:y:2021:i:c:s2214635021000897

DOI: 10.1016/j.jbef.2021.100545

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