Attracting the Sharks: Corporate Innovation and Securities Class Action Lawsuits
研究发现证券集体诉讼可能阻碍有价值的创新，因为创新成功反而增加诉讼风险，企业因此调整创新决策。
This paper provides novel evidence suggesting that securities class action lawsuits, a central pillar of the U.S. litigation and corporate governance system, can constitute an obstacle to valuable corporate innovation. We first establish that valuable innovation output makes firms particularly vulnerable to costly low-quality class action litigation. Exploiting judge turnover in federal courts, we then show that changes in class action litigation risk affect the value and number of patents filed, suggesting firms take into account that risk in their innovation decisions. A new perspective we provide is that innovation success, not only innovation failure, can increase firms’ securities class action litigation risk. This paper was accepted by Victoria Ivashina, finance. Funding: E. Kempf gratefully acknowledges financial support from the James S. Kemper Foundation at the University of Chicago Booth School of Business. Supplemental Material: Data and the internet appendix are available at https://doi.org/10.1287/mnsc.2022.4388 .