Publication Type
Working Paper
Version
submittedVersion
Publication Date
10-2018
Abstract
We identify “ineffective” institutional monitors based on the prevalence of occurrences of securities class-action lawsuits in their overall portfolio. We find that firms with a higher representation of such institutional investors among the firms’ large shareholders have a greater likelihood of future litigation and experience more negative market reactions upon such litigation filings. These firms exhibit other unfavorable governance outcomes including poorer acquisitions and lower CEO turnover-performance sensitivity. We find suggestive evidence that ineffective monitoring may be a result of higher operational risk.
Keywords
Institutional investors, Securities class action litigation, Shareholder linkages, Corporate governance
Discipline
Corporate Finance | Portfolio and Security Analysis
Research Areas
Finance
First Page
1
Last Page
58
Citation
WEI, Chi Shen and ZHANG, Lei.
Identifying ineffective monitors from securities class action lawsuits. (2018). 1-58.
Available at: https://ink.library.smu.edu.sg/lkcsb_research/6573
Copyright Owner and License
Authors
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.
External URL
https://ssrn.com/abstract=2756247