CEO Power and Lawsuit Likelihood

• In Event: Ethical Climate and Determinants

Abstract

This study examines whether and how Chief Executive Officer (CEO) power relates to the likelihood of lawsuits against public corporations. We obtain lawsuit data from the special items section of the income statement since companies report their lawsuit settlement gain or loss in this section. We find a significant positive relation between CEO power and lawsuit likelihood, suggesting that firms with powerful CEOs are more likely to become involved in lawsuits. We further find that this relation is largely driven by male CEOS, and is stronger for firms with shorter CEO tenure, firms with relatively older CEOs, and firms with lower cash holdings.

Authors

• Akhilesh Bajaj, The University of Tulsa

• Adrien Bouchet, The University of Tulsa

• Li Sun, The University of Tulsa