To Sue or Not To Sue?: Foreign-Sounding CEO Name and Class-Action Lawsuits

Gajanan Ganji, Arati Kale and Devendra Kale
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Gajanan Ganji: The University of Texas at Arlington
Arati Kale: Providence College
Devendra Kale: University of Rhode Island

American Business Review, 2024, vol. 27, issue 1, 5-95

Abstract: In this paper, we investigate if the perceived name-based ethnicity of CEOs has any relationship with the likelihood of shareholder class-action lawsuits. Using machine learning algorithms on CEO names, we develop an objective proxy of name-based ethnicity and find that firms managed by ‘foreign-sounding’ CEOs exhibit a lower likelihood of class-action lawsuits. Our results are robust to matched sample analysis, Heckman two-stage selection, alternate model specifications as well as use of an alternate proxy. We further find that succession of a foreign-sounding CEO by a non-foreign-sounding CEO increases the likelihood of class-action lawsuits. Our paper has important implications for firms, especially in high litigation industries or high litigation situations.

Keywords: Diversity; Class-Action Lawsuits; CEOs (search for similar items in EconPapers)
JEL-codes: M14 (search for similar items in EconPapers)
Date: 2024
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Citations: View citations in EconPapers (1)

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