Corporate litigation risk and total factor productivity: The mechanism of financing constraints

Yan Liu, Yinglong Zheng, Juan Li and Xuemei Cheng

Finance Research Letters, 2025, vol. 79, issue C

Abstract: This study, based on data from Chinese listed companies from 2008 to 2022, examines the impact of corporate litigation risk on firms' total factor productivity, while considering the mediating role of financing constraints. The empirical results indicate that corporate litigation risk suppresses firms' total factor productivity. Financing constraints serve as a mediating mechanism in the relationship between litigation risk and total factor productivity, with this mediating effect exhibiting heterogeneity between state-owned enterprises and private enterprises. Additionally, the impact of litigation risk on total factor productivity differs between state-owned and private enterprises.

Keywords: Litigation risk; Total factor productivity; Financing constraints (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:79:y:2025:i:c:s154461232500546x

DOI: 10.1016/j.frl.2025.107283

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