Ideology Of Judges Research Articles

Judge Ideology and Opportunistic Insider Trading

Abstract Although federal judges are the ultimate arbiters of insider trading enforcement, the role of their political ideology in insider trading is unclear. Using the partisanship of judges’ nominating presidents to measure judge ideology, we first document that liberal judges are associated with heavier penalties in insider trading lawsuits than conservative judges. Next, we find that firms located in circuits with more liberal judges have fewer opportunistic insider sales. Cross-sectional analyses show that this deterrent effect is stronger when managers face a higher risk of insider trading lawsuits. Finally, we find that the Securities and Exchange Commission considers judges’ ideology when selecting litigation forums.

Fear of Fairness in Courts: The Impact of Liberal Judge Ideology on Corporate Carbon Emissions

Fear of Fairness in Courts: The Impact of Liberal Judge Ideology on Corporate Carbon Emissions

Judge ideology and debt contracting

We examine the effect of ex ante litigation risk on the price and non-price terms of loan contracts. Since expected litigation is endogenous, we focus on federal circuit court judge ideology to generate plausibly exogenous variation in the outcome of a class action lawsuit. We find that loans issued by firms headquartered in circuits with a higher likelihood of drawing a liberal panel of judges in a class action lawsuit have higher loan spreads, shorter maturity, and a larger number of and more restrictive covenants. To strengthen our claim that judge ideology affects loan contracting through its effect on the outcome of a class action lawsuit, we show that the influence of judge ideology on price and nonprice terms of loans is strongly influenced by factors that influence the probability of a class action lawsuit. Overall, our results bolster the case that litigation risk has a causal effect on debt contracting.

Judge Ideology and Corporate Sexual Orientation Equality

We investigate the role that judge ideology plays in determining corporate sexual orientation equality (CSOE) initiatives. We find a negative relationship between liberal judge ideology and CSOE initiatives. This is consistent with the agency perspective. Further analysis suggests that this association is intensified for firms led by powerful chief executive officers (CEOs) and those that possess higher corporate social responsibility (CSR) ratings. Finally, we show that firms in liberal jurisdictions that invest more in CSOE initiatives pay higher premium while raising external capital. Our results are robust for an array of sensitivity and identification tests.

Litigation Risk and IPO Underpricing: Evidence from Federal Judge Ideology

Litigation Risk and IPO Underpricing: Evidence from Federal Judge Ideology

Estimating Judicial Ideology

We review the substantial literature on estimating judicial ideology, from the US Supreme Court to the lowest state court. As a way to showcase the strengths and drawbacks of various measures, we further analyze trends in judicial polarization within the US federal courts. Our analysis shows substantial gaps in the ideology of judges appointed by Republican Presidents versus those appointed by Democrats. Similar to trends in Congressional polarization, the increasing gap is mostly driven by a rightward movement by judges appointed by Republicans. We conclude by noting important avenues for future research in the study of the ideology of judges.

Judge Ideology, SEC Enforcement, and Insider Trading

Judge Ideology, SEC Enforcement, and Insider Trading

Judge Ideology and Corporate Tax Planning

The judicial branch of the federal government plays a critical role in interpreting tax laws by resolving disputes between corporations and the Internal Revenue Service (IRS). This study investigates whether and how it affects corporate tax planning. We find that corporations engage in less aggressive tax planning when Circuit Court and Tax Court judges are more liberal. This effect is economically significant and robust across various measures of tax planning including cash effective tax rate and unrecognized tax benefits. We further detail specific tax planning tactics in response to liberal judge ideology, including shifting less income overseas and conducting more tax planning in foreign jurisdictions. Corporations also engage in forum shopping in tax litigations to avoid liberal judges. Finally, we show that IRS enforcement complements the judge ideology effect. Overall, our evidence helps paint a picture of how the three branches of government jointly influence corporate taxation.

The Impacts of Judge Ideology on Auditors’ Litigation Risk: Evidence from Auditors’ Behaviors

This study investigates whether and how judge ideology affects auditors’ litigation risk. Using the appointing president’s political affiliation to measure federal judge ideology, we document that audit fees charged to auditees locating in jurisdictions of circuit courts with more Democratic judges are higher. We also document that the auditees locating in jurisdictions of circuit courts with more Democratic judges are more likely to receive going concern opinions. We do not find meaningful impact of judge ideology on audit quality. We interpret our results as that judge ideology is an important factor in the legal environment that affects auditors’ behavior and auditors believe that the impact of judge ideology is resulted from political consideration rather than from interpretation of auditors’ professionalism.

Federal Judge Ideology: A New Measure of Ex Ante Litigation Risk

ABSTRACTDrawing on the political theory of judicial decision making, our paper proposes a new and parsimonious ex ante litigation risk measure: federal judge ideology. We find that judge ideology complements existing measures of litigation risk based on industry membership and firm characteristics. Firms in liberal circuits (the third quartile in ideology) are 33.5% more likely to be sued in securities class action lawsuits than those in conservative circuits (the first quartile in ideology). This result is stronger after the U.S. Supreme Court's ruling in the Tellabs case. We next show that the effect of judge ideology on litigation risk is greater for firms with more sophisticated shareholders and with higher expected litigation costs. Furthermore, judicial appointments affect litigation risk and the value of firms in the circuit, highlighting the economic consequences of political appointments of judges. Finally, using our new measure, we document that litigation risk deters managers from providing long‐term earnings guidance, a result that existing measures of litigation risk cannot show.

Federal Judge Ideology and the Going Concern Reporting Incentives of Big 4 and Non-Big 4 Auditors

We analyze how variation in federal level legal liability associated with judge ideology is associated with the likelihood of firms receiving going-concern modified audit opinions, separately for Big Four and non-Big Four clients. With auditors trading off between Type I and Type II reporting errors, the threshold value (of client bankruptcy probability) above which auditors issue going-concern reports is decreasing and convex in the level of federal litigation risk. Building on literature showing that federal judge ideology affects the likelihood and outcome of lawsuits, we find that Big Four and non-Big Four auditors converge in their going-concern reporting decisions as federal litigation risk increases and that this convergence is caused by the greater effect of judge ideology on non-Big Four than on Big Four auditors. The key results remain with firm-fixed effects and are not driven by the effects of judge ideology on auditor choice or bankruptcy probability.

Federal Judge Ideology: A New Measure of Ex-Ante Litigation Risk

Drawing on the political theory of judicial decision making, our paper proposes a new and parsimonious ex ante litigation risk measure: federal judge ideology. We find that judge ideology complements existing measures of litigation risk based on industry membership and firm characteristics. Firms in liberal circuits (the third quartile in ideology) are 33.5% more likely to be sued in securities class action lawsuits than those in conservative circuits (the first quartile in ideology). This result is stronger after the U.S. Supreme Court’s ruling in the Tellabs case. We next show that the effect of judge ideology on litigation risk is greater for firms with more sophisticated shareholders and with higher expected litigation costs. Furthermore, judicial appointments affect litigation risk and the value of firms in the circuit, highlighting the economic consequences of political appointments of judges. Finally, using our new measure, we document that litigation risk deters managers from providing long-term earnings guidance, a result that existing measures of litigation risk cannot show.

Precedent vs. Politics? Case Similarity Predicts Supreme Court Decisions Better than Ideology

Using the universe of U.S. Circuit Court cases appealed to the Supreme Court since 1946, we show that case similarity based on Circuit Court opinions achieves better prediction accuracy of Supreme Court decisions relative to the current best prediction model, which is based on ideology of judges and trends of how they vote. Relative to the benchmark prediction accuracy of 59%, textual measures of case similarity achieve prediction accuracy of 64%. We interpret this improvement to suggest that precedent matters more than politics alone. We also offer our model available as a web application.

The Political Ideologies of Law Clerks

In order to study the political ideologies of judicial law clerks in the United States, we construct a novel dataset that combines information on the identity of clerks with a measure of political ideology based on political donations. We then use this data to empirically investigate several important questions about the ideologies of clerks. First, we examine whether clerks tend to share the liberal ideology of other lawyers or the more conservative ideology associated with federal judges and find that clerks tend to be disproportionately liberal. Second, we investigate how the ideologies of clerks compares to the ideologies of lawyers and find that liberal lawyers are more likely to have clerked than conservatives. Third, we assess whether the ideologies of clerks differs based on the level of clerkship and find that the liberal skew becomes less pronounced as the prestige of the clerkship increases. Fourth, we analyze the relationship between ideology and the hiring of clerks and find that the ideology of judges is strongly correlated with the ideology of their clerks.

The Political Ideologies of Law Clerks and their Judges

In order to study the political ideologies of judicial law clerks in the United States, we construct a novel dataset that combines information on the identity of clerks with a measure of political ideology based on political donations. We then use this data to empirically investigate several important questions about the ideologies of clerks. First, we examine whether clerks tend to share the liberal ideology of other lawyers or the more conservative ideology associated with federal judges and find that clerks tend to be disproportionately liberal. Second, we investigate how the ideologies of clerks compares to the ideologies of lawyers and find that liberal lawyers are more likely to have clerked than conservatives. Third, we assess whether the ideologies of clerks differs based on the level of clerkship and find that the liberal skew becomes less pronounced as the prestige of the clerkship increases. Fourth, we analyze the relationship between ideology and the hiring of clerks and find that the ideology of judges is strongly correlated with the ideology of their clerks.

The Role of Competence in Promotions from the Lower Federal Courts

The judicial behavior literature typically assumes that politicians nominate judges on the basis of their ideology. That assumption helps explain studies that show a statistical correlation between the party of the nominating president and the ideological direction of the votes of judges. However, the assumption is too simple. Casual empiricism suggests that politicians, interest groups, and the public care not only about the ideology of judges. They may also care about their competence and political loyalty and about ensuring that the judicial system is diverse. We focus on the role of competence in judicial promotions. We find, however, that presidents do not take much account of competence when promoting judges—despite the fact that there is some, albeit mixed, evidence that the most competent appellate judges were highly competent district judges.

Estimating Dynamic Ideal Points for State Supreme Courts

Courts of last resort in the American states offer researchers considerable leverage to develop and test theories about how institutions influence judicial behavior. One measure critical to this research agenda is the individual judges' preferences, or ideal points, in policy space. Two main strategies for recovering this measure exist in the literature: Brace, Langer, and Hall's (2000, Measuring preferences of state supreme court judges,Journal of Politics62(2):387–413) Party-Adjusted Judge Ideology and Bonica and Woodruff's (2014, A common-space measure of state supreme court ideology,Journal of Law, Economics, & Organization, doi: 10.1093/jleo/ewu016) judicial CFscores. Here, we introduce a third measurement strategy that combines CFscores with item response (IRT) estimates of judicial voting behavior in all fifty-two state courts of last resort from 1995 to 2010. We show that leveraging two distinct sources of information (votes and CFscores) yields a superior estimation strategy. Specifically, we highlight several key advantages of the combined measure: (1) it is estimated dynamically, allowing for the possibility that judges' ideological leanings change over time and (2) it maps judges into a common space. In a comparison against existing measurement strategies, we find that our measure offers superior performance in predicting judges' votes. We conclude that it is a valuable tool for advancing the study of judicial politics.

Appointment Politics and the Ideological Composition of the Judiciary

Scholars have advanced a wide range of theories regarding the role of Senate confirmation in judicial appointments. In this article, I directly test the predictions of these models using a novel measure of the ideology of judges on the U.S. Courts of Appeals. The main results indicate that the filibuster and majority party have predominated in appointment politics. Prompted by recent events, I also conduct a simulation-based exercise to examine the ideological composition of the judiciary under a confirmation regime in which the filibuster is not present. This exercise suggests that the Senate filibuster induces moderation in judicial appointments; the elimination of the filibuster is likely to result in a more contentious, if less dilatory, confirmation process and a more polarized judiciary.

Alf Ross and Realist Conceptions of Legislation

Alf Ross was certainly the best-known and consistent theoretician within the movement known as Scandinavian realism. In his main work, On Law and Justice, Ross constructs an empiricist theory of law on the basis of a positivist methodology and non-cognitivist meta-ethics. In this constellation, legislation does not occupy the same place as in formalist theories like normativism. Legislation instead is an element of the sources of the law, and for that reason, considered a part of the normative ideology of judges. Despite this, according to Ross there is no call from a scientific point of view for a specific study of legislation, and in particular of law-making. One of the most surprising aspects of the theory proposed by Ross in On Law and Justice is found in its final chapters, where Ross develops his concept of legal politics. Legal politics is not a scientific activity, but a scientifically-based practical activity: Guidance for the legislator for the purpose of articulating premises for influencing social action and proposing formulations instructing legislative organs when they enact the law. There is no inconsistency in the way Ross deals with this issue, and the entirety remains coherent to his non-cognitivist premises. On the other hand, his theory of legal politics appears unrealistic as the preconditions for its efficacy are scarcely tenable. In a sense, this theory appears more to be a self-justification for the practical activities of certain Scandinavian lawyers rather than a true realist theory.

Institutional Structure and Judge Ideology in Tort Litigation in State Supreme Courts

Institutional Structure and Judge Ideology in Tort Litigation in State Supreme Courts