Threat Of Litigation Research Articles

Over-hedging in the shadow of weaker litigation threat

Using the staggered adoption of universal demand (UD) laws by U.S. states over the period 1997–2010 as a quasi-natural experiment, we examine the impacts of weakened shareholder litigation rights on corporate financial risk management. We find that firms facing reduced litigation threats post-UD law adoption engage in more currency hedging, coupled with decreases in firm value. The increase in risk management is particularly pronounced for firms with higher pre-existing litigation risk, weaker governance structures, and greater managerial entrenchment. Our evidence suggests that diminished shareholder litigation threat incentivizes managers to over-hedge to protect their own interests rather than maximize shareholder value.

Defensive healthcare practice: systematic review of qualitative evidence

ObjectiveTo synthesise qualitative evidence on clinicians’ views and experiences of defensive practice.DesignSystematic review of qualitative data.Data sourcesMEDLINE, Embase, PsycINFO, AMED, Maternity and Infant Care, CINAHL, ASSIA, Sociological s, Proquest Dissertations...

Corporate sustainability and biodiversity reporting: A proactive business strategy to mitigate litigation and reputational risks

AbstractBiodiversity is important to human's future survival and global sustainability. One way to achieve corporate sustainability is for firms to report its impacts on biodiversity. However, fear of litigation arising from reporting potentially deters corporations to disclose such information. Motivated by the importance of biodiversity and mixed evidence of shareholder litigation rights as a corporate governance tool, we explore whether the universal demand laws (UDLs) have any effect on corporate biodiversity reporting in the United States. Supporting our short‐termism, risk aversion and agency hypotheses, we find that an exogenous decline in the threat of derivative litigation, reducing a chance for shareholders to file a lawsuit against top management and intensifying agency costs, economically and significantly decreases a corporate's biodiversity reporting by 87%. When the disciplining effect of shareholder litigation drops, the self‐interest manager may want to live a quiet life and disclose less information of biodiversity impact. A proactive business strategy to mitigate litigation and reputational risks is to voluntarily disclose more biodiversity‐related information. Regulators around the world should also promote rigorous reporting requirements to reverse biodiversity loss and save our humanity.

Why Are Corporate Investment Horizons Shrinking? Uncovering the Spillover Effects of Shareholder Litigation

Existing research shows that shareholder pressures can shorten firms’ investment horizons. Yet studies have so far been limited to the actions shareholders take directly toward a focal firm. Considering that shareholder pressures may spill over between organizations, we argue that firms shorten their investment horizons following shareholder-initiated lawsuits against their peers in an effort to boost their short-run performance and preempt being sued themselves. We further posit that the negative relationship between this form of litigation threat and a firm’s investment horizon is weakened among firms with more long-term shareholders or future-focused CEOs, both of which guard against managers becoming overly short-term oriented. An examination of 18 years of shareholder litigation data supports our theory. This study highlights shareholder litigation as a distinct form of shareholder voice and one that is sufficiently potent to create spillover effects between firms.

EXPRESS: So, Sue Me … If You Can! How Legal Changes Diminishing Managers’ Risk of Being Held Liable by Shareholders Affect Firms’ Likelihood to Recall Products

Research examining the antecedents instead of consequences of recalls is relatively sparse and has not considered whether firms’ likelihood to recall products is influenced by legal changes that could induce managerial opportunism, such as those reducing shareholder litigation risk. To examine this question, the authors exploit the staggered adoption of universal demand (UD) laws across different states in the U.S. as a quasi-natural experiment. UD laws aim to prevent frivolous litigation from disrupting a firm’s normal business operations by making it more difficult for shareholders to sue managers for neglecting their fiduciary duties and hold them personally liable. Although UD laws are well-intended, the reduced threat of shareholder litigation disciplining a firm’s managers could have unintended negative consequences. Indeed, using a difference-in-differences (DiD) analysis, the authors find that following the adoption of UD laws, affected firms become less likely to recall products. This effect is weaker in the presence of organizational mechanisms constraining managers’ self-interest-seeking behavior, such as a corporate culture focused on customer needs and interests or the exercise of normative control through monitoring by institutional investors. The authors do not find support for a potential alternative explanation of operational improvement and therefore higher product quality driving their findings.

Disclosure of Internal Control Weaknesses and Auditors’ Litigation Risk

SUMMARY We investigate whether the concern of shareholder litigation motivates auditors to disclose internal control weaknesses. We document that issuing adverse internal control opinions reduces the likelihood of auditors being named with their clients as defendants in shareholder lawsuits. This finding suggests that auditors can reduce their legal liability arising from failed financial statement audits by increasing the quality of internal control audits. Consistent with this expectation, we find that auditors are more likely to issue such opinions in a timely manner for clients with higher ex ante litigation risk. Overall, our evidence suggests that the threat of litigation provides an incentive rather than a disincentive for auditors to issue adverse internal control opinions for clients with higher litigation risk. Data Availability: The data are available from public sources indicated in the paper. JEL Classifications: M42; K41.

Litigation Hampers a Country\'s Development - Study on National Highway Projects

Abstract: Court proceedings and litigation are on the rise globally. The judiciary is having trouble keeping up with the daily rise in lawsuits. Litigation impedes the development of the nation. Both developed and developing nations have their unique systems for conducting legal proceedings. The legal proceeding is intricate, time-consuming, and expensive. Each nation allocates a larger portion of its budget to infrastructure since it helps the nation's socioeconomic development. The study area is considered a national highway project of India. In this study, the eleven-year litigation data was collected from the Supreme Court of India, Gujarat High court, and Delhi High court for the National Highway Authority of India. The said data are compared with each other by a linear relationship. The finding indicates that in the various courts a significant number of unresolved cases are increasing daily. The study is valuable for displaying and quantifying the potential threat of litigation that could hamper a country's development. This study has the capacity to effectively address litigation in national highway project. This study has two limitations it has considered only national highway projects under NHAI and it focuses only on three court cases i.e. Supreme Court, Gujarat high court, and Delhi high court.

Examining the power of the alcohol and tobacco industries in policymaking: Lessons and challenges for the Philippines and Singapore

Abstract
 Aims: Transnational alcohol and tobacco corporations are expanding operations in Southeast Asia. This study has two objectives: to examine the power of the tobacco and alcohol industries in shaping tobacco and alcohol policies in the Philippines and Singapore and to identify key lessons and challenges for alcohol and tobacco control.
 Methods: We developed a conceptual framework from the literature on power and political, commercial and determinants of health. We collected data from official government documents, corporate documents, and news articles for content analysis on the tactics of the alcohol and tobacco industries. We also conducted 30 in-depth, anonymised interviews in the Philippines and Singapore and conducted a thematic analysis of the transcribed interviews.
 Findings: Transnational and national alcohol and tobacco corporations use various tactics to influence the policy process for alcohol and tobacco control in the Philippines and Singapore. These industries utilised lobbying, litigation or threat of litigation, revolving doors, and marketing to exercise their instrumental power. These industries exercised their structural power by exploiting their market dominance, and public-private partnerships, promoting self-regulation, and benefiting from regulatory capture. They tapped framing tactics, corporate social responsibility activities and public-private partnerships to exert their discursive power.
 Conclusions: The alcohol and tobacco industries’ exercise of instrumental, structural, and discursive powers is mutually reinforcing. Policymakers, researchers, and civil society organisations working on alcohol and tobacco control need to understand and tackle these powers in the context of power asymmetries within countries and consider the dynamics of local, national, and international laws and corporate practices.

The impact of shareholder litigation risk on income smoothing

AbstractThis paper investigates whether and how shareholder litigation influences income smoothing. Using the ruling of the Ninth Circuit Court of Appeals in 1999 as an exogenous shock to the threat of litigation, we find that the increasing difficulty of class action lawsuits decreases income smoothing. This finding is robust to different model specifications. We also show that such an effect is stronger for firms that are more likely to face greater pressure from the threat of shareholder litigation risk. Overall, our findings extend the literature on investigating how class action lawsuits can affect the motivation of income smoothing.

Shareholder litigation and workplace safety

Using the staggered adoption of Universal Demand (UD) laws at the state level that increased the hurdle of shareholder derivative suits as a shock, we find that reduced litigation threat increases workplace injury rates. The effect is more pronounced for treated firms facing higher litigation risk, less product market competition, in low union coverage industries, and with Employee Stock Ownership Plans (ESOPs). Treated firms with high ownership by “dedicated” or local institutional investors are less affected as these investors can monitor safety through voice and exit. Safety inputs fall in treated firms following the adoption of UD laws. Overall, the findings suggest that shareholder litigation threat plays a critical role in workplace safety.

DISPARITIES CSR IMPLEMENTATION IN DEVELOPING COUNTRIES: CSR PRACTICES IN STATE-OWNED COMPANIES AT THE INDONESIAN STOCK EXCHANGE

Corporations have yet to maximally realize their social responsibility in Indonesia. This study seeks to understand companies' reporting of their corporate social responsibility (CSR) programs, as well as investigate the optimal forms and strategies for CRS. Primary and secondary data were collected; the former through interviews with ten corporate actors (CEOs and CSR directors), and the latter through a reading of corporations' annual reports for 2019. Analysis shows that an economic rationale, oriented towards calculating the costs and benefits of programs, is one major reason for CSR falling short of its potential. Further exacerbating the issue, lax government regulations have given corporations significant space in interpreting the best practices. To ensure optimal CSR implementation, an integrated support system may be used, one capable of pressuring corporations through the threat of litigation. Such an integrated support system model would enable government development programs to be integrated with CSR, and to be realized synergistically and sustainably. This article is limited to the perspectives of external stakeholders (governmental, non-governmental, and community actors), and thus further research is necessary to uncover internal perspectives and achieve a more comprehensive understanding.

Does Shareholder Litigation Risk Cause Public Firms to Delist? Evidence from Securities Class Action Lawsuits

Abstract Using three exogenous shocks to ex ante litigation risk, including federal judge ideology and two influential judicial precedents, we find that lower shareholder litigation risk reduces a firm’s propensity to delist from the U.S. stock markets. The effect is at least partially driven by indirect costs of litigation and that being a private firm can significantly reduce the threat of litigation. Overall, the results suggest that mitigating excessive litigation costs for public firms is crucial to ensure the continued vibrancy of the U.S. stock market.

‘One always looks for a compromise…’: Senior prison managers’ views of law, human rights and prisoner complaints in Germany

German prison legislation is based on a fundamental rights approach but there has been little examination of how those who should be instantiating a culture of rights in penal regimes – prison staff – view such laws and rights. This question is of cross-national importance. Holding considerable power over people in custody, examining the ways in which prison staff see and act on obligations to protect these individuals provides useful insights into how a culture of human rights in detention exists, or otherwise. In this article, we seek to contribute to the literature on human rights in the context of punishment by examining how senior staff in German prisons view legal regulation, prisoners’ rights, and the mechanism designed to protect them: complaints. Drawing on 24 interviews conducted in four prisons across two Federal States, we find that the principle of resocialisation, considered to be a core feature of German prison law, is influential on prison managers. German prison legislation links this principle to prisoners’ rights, including the right to complain. Managers valued the law as a form of guidance though were more positive about legal regulation when it was used by them rather than against them or the prison system. Some saw legal precepts as useful ways of defending themselves against threats of litigation or blame. While the study finds that law is highly present in prison manager culture in Germany, the principle of resocialisation in prison management practice may have created a view of prisoners as people to be in need, rather than worthy of rights.

Defensive medicine and medical liability: A Cross-sectional study in Kasr Alainy Obstetrics and Gynecology hospital

Background and Aims: Defensive medicine is medicine practiced in such a way primarily to avoid or defend against the threat of malpractice litigation. The rate of practice of defensive medicine has been increasing in recent years across the world. High percentages of defensive medicine have a significant economic cost through affecting doctors’ decisions. The problem is compounded in Egypt as it currently lacks a medical litigation law, and doctors in Egypt are tried by the criminal law instead. This study aims to identify the practice of defensive medicine in light of such conditions, as well as highlight some of its causes. Methods: This is a cross-sectional study conducted by a self-administered questionnaire among obstetricians and gynecologists of Kasr Alainy University OBGYN Hospital. It included 160 doctors from a total of 250 doctors. Binary logistic regression and Chi square tests were used to calculate the predictors of practice of defensive medicine and its forms. Results: (81%) of the doctors practiced at least one form of defensive medicine. Many predictors were significant including duration of practice, gender (male), witnessing a colleague getting sued or personally getting sued, and feeling limited in practice due to the current state of the law. Conclusions: The practice of Defensive medicine in Kasr Alainy OBGYN Hospital is considerably high but still in line with other countries. The lack of medical law is a significant factor, but there are other factors affecting the practice of defensive medicine. Efforts to reduce defensive medicine must start with enacting a medical law.

ABD HUKUKU UYARINCA OTONOM ARAÇLAR ÇAĞINDA TEKEFFÜLLER VE FEDERAL HUKUKUN ÜSTÜNLÜĞÜ

Autonomous vehicle (AV) technology promises society many social, economic, and environmental benefits. It is crucial to examine the legal environment behind this breakthrough technology. Under US law, where the AV technology is most regulated, this Article delves into two critical legal issues AVs will face: i) law of warranties and ii) preemption of state common law claims. This Article argues that the role of warranty claims would be limited because most AVs will not be sold to the public in the first years, meaning that there will be no express or implied warranties. However, we will likely witness AVs will be sold to the public at some point in the future. When this happens, express or implied warranties will arise in the contract between the buyer and the seller. Preemption of common law claims, including those relying on warranties, would bring complex and uncertain problems as to whether these claims are preempted by federal law on AVs. Since previous preemption cases related to conventional motor vehicles involved specific designs, this Article asserts that performanceoriented standards––assessing whether an AV drives more safely than a conventional vehicle––will work around unpredictable preemption questions. Moreover, if the threat of future litigation becomes too great for AV manufacturers, federal preemption could limit AV manufacturers’ liability for compensation to injured plaintiffs. These proposals will constitute pragmatic and efficient solutions to the preemption-related, complicated and uncertain problems.

"Are they trying to control us people?": News media coverage of COVID-19 lockdown tobacco sales ban in South Africa.

The South African government imposed one of the strictest lockdowns in the world as part of measures to curb the spread of COVID-19 in the country, including a ban on the sale of tobacco products. This study explored news media coverage of arguments and activities in relation to the South African lockdown tobacco sales ban. We collected media articles published between 26 March to 17 August 2020, which corresponded to the period of the sales ban. Data were sourced via google search and snowball identification of relevant articles. Thematic analysis of data was conducted with the aid of NVivo. We analysed a total of 305 articles relevant to the South African tobacco sales ban during the lockdown. Six major themes were identified in the data: challenges associated with implementing the ban, litigation, and threats of litigation to remove the ban, governance process and politicization of the ban, pro and anti-tobacco sales ban activities and arguments and reactions to the announcement lifting the ban. The initial reason for placing the ban was due to the non-classification of tobacco products as an essential item. Early findings of a link between tobacco smoking and COVID-19 disease severity led to an extension of the ban to protect South Africa's fragile health system. Pro-sales ban arguments included the importance of protecting the health system from collapse due to rising COVID-19 hospitalization, benefit of cessation, and the need for non-smokers to be protected from exposure to secondhand smoke. Anti-sales ban arguments included the adverse effect of nicotine withdrawal symptoms on smokers, loss of jobs and the expansion of the illicit cigarette markets. Litigation against the ban's legality was a strategy used by the tobacco industry to mobilize the public against the ban while promoting their business through the distribution of branded masks and door-to-door delivery which goes against current tobacco regulations. The media could serve as a veritable tool to promote public health if engaged in productive ways to communicate and promote public health regulations to the general population. Engagement with the media should be enhanced as part of health promotion strategies.

The 2018 public consultation on standardized packaging in Singapore: Analysis of policy actors' submissions

After a public consultation in 2018, Singapore implemented standardized tobacco packaging as part of its portfolio of tobacco control policies in 2020, in compliance with Article 11 guidelines for implementing the World Health Organization Framework Convention on Tobacco Control. This study analyzed policy actors in opposition to standardized packaging in Singapore and their submissions to the public consultation. Policy actors were profiled, and their arguments were then coded and compared across submissions. Descriptive results were then summarized in a narrative synthesis. In total, 79 submissions were considered for final analysis that opposed plain packaging in Singapore. Thematic analysis shows that transnational tobacco companies and their subsidiaries in Singapore, along with a variety of policy actors opposed to the standardized packaging policy, have significant similarities in arguments, often with identical statements. Industry tactics included framing tobacco as a trade and investment issue; utilizing trade barriers, intellectual property, and investment rights; pursuing litigation or threat of litigation; mobilizing third-party support and citing policy failure. This study provides evidence that further contributes to the growing literature on commercial determinants of health particularly industry tactics and, in this case, where the tobacco industry and its local and global allies, utilize to counter evidence-based tobacco control measures.

Time for tobacco-free generations in the Western Pacific?

Time for tobacco-free generations in the Western Pacific?

Overcoming tobacco industry opposition to standardized packaging in the Americas.

ABSTRACTCountries in the Region of the Americas have been slow to adopt standardized packaging of tobacco products. The objectives of this analysis are to report on the progress made in adopting such packaging in countries in the Region, review known tobacco industry strategies for opposing these policies and discuss the resources available to academics, advocates and policy-makers who might be interested in advancing the use of standardized packaging in the Region. Of the 23 countries worldwide that have fully adopted standardized packaging laws, only 2 are in the Region (Canada and Uruguay). Six other countries (Brazil, Chile, Costa Rica, Ecuador, Mexico and Panama) have tried to introduce standardized packaging through draft bills, all of which have been delayed or withdrawn. There are indications that the tobacco industry has used its playbook of arguments to oppose the policy in those countries, including allegations that standardized packaging breaches national laws and international treaties protecting intellectual property, alongside threats of litigation. It is possible that these threats and allegations may have had a greater effect in the Region because of the lengthy (6 years) and costly (legal fees of US$ 10 million) international investment arbitration brought by Philip Morris International against Uruguay’s strong tobacco packaging laws. However, all of the industry’s arguments have been debunked, and national courts and international legal forums have upheld standardized packaging as a lawful policy. Governments in the Region of the Americas should follow the examples of Canada and Uruguay and reject the industry’s false arguments and litigation threats. This analysis discusses some of the financial and technical resources that can assist them.

The impact of chief risk officer appointments on firm risk and operational efficiency

AbstractTo exercise risk control at the corporate level, firms often appoint Chief Risk Officers (CROs) to their top management team. By establishing CRO positions, firms can reduce firm risk and potential financial losses caused by operational disruptions. Yet, by inducing stringent control measures on risks, security, and compliance, CRO appointments might create unwieldy bureaucracies with operational hurdles and incur burdensome costs that offset efficiency. Using longitudinal secondary data collected from multiple sources, we analyze the impact of CRO appointments on firm risk and operational efficiency of 435 publicly listed firms in the United States from 2006 to 2016. Our results indicate that CRO appointments not only reduce risks, but also improve efficiency in operations. We delve into the power of CROs and find that more powerful CROs are more effective in enhancing the operational efficiency of firms. We further examine the contextual factors and reveal that firms operating under high industry litigation threats and industry dynamism improve operational efficiency to a greater extent after CRO appointments. Overall, CROs' appointments are more beneficial to firms when they have stronger power in the top management team and when the operating environments are uncertain and volatile.