Ex-ante litigation risk and firm-level climate-change exposure

Ashrafee Hossain, Hatem Rjiba and Dongyang Zhang

Journal of Economic Behavior & Organization, 2023, vol. 214, issue C, 731-746

Abstract: We examine the impact of liberal judge ideology, as an exogenous proxy for ex-ante litigation risk, on firm-level climate-change exposure (CCE). Consistent with the idea that liberal courts provide an external agency-mitigating influence, we find that United States (U.S.) firms headquartered in states covered by judicial circuits that are more likely to be dominated by liberal judges have lower CCE. We also show that the negative association between liberal court and CCE is more pronounced for firms with lower corporate-social-responsibility (CSR) performance, higher short-term [myopic] institutional ownership, powerful chief executive officers (CEOs), or weaker governance. Our findings are robust to considerations of alternative measures of our main variables and several tests for endogeneity concerns.

Keywords: Litigation risk; Federal judge ideology; Climate change exposure (search for similar items in EconPapers)
JEL-codes: K11 (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (8)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jeborg:v:214:y:2023:i:c:p:731-746

DOI: 10.1016/j.jebo.2023.09.008

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