Liquidity Effects of Litigation Risk: Evidence from a Legal Shock
利用韩国证券集体诉讼分阶段引入这一法律冲击，研究发现诉讼风险上升后企业显著增加现金持有，尤其是无董事高管责任保险和融资受限的企业，同时股票市场流动性和估值也得到改善。
Theory offers two diverging views on the effects of ex ante litigation risk on corporate liquidity proxied by cash holdings. Ex ante litigation risk, however, is difficult to measure. We test the liquidity effects of ex ante litigation risk by exploiting the phase-by-phase introduction of securities class actions (SCAs) in Korea. Following the increase in litigation risk, firms significantly increase their internal liquidity, especially those without directors’ and officers’ liability insurance and those that are financially constrained. The results hold robustly in difference-in-differences and regression discontinuity designs. We also find that the increase in ex ante SCA risk improves firms’ stock market liquidity and valuation, especially for firms that do not carry liability insurance. Taken together, the results are consistent with the arguments that SCAs increase firms’ liability risk and lower investors’ risk.