@article{f29a5e0502c84e31acb45ff4bd9d50d1,
title = "The equity value implications of court ideology: Evidence from federal judge turnover",
abstract = "We use exogenous variation in federal courts' composition, for instance due to a judge's death, as a quasi-natural experiment to study the equity value implications of court ideology. This design allows us to establish that firms experience an equity value loss when federal court ideology shifts in favor of plaintiffs and against corporations. The value loss stems from: (i) an increase in the expected costs of litigation; (ii) the deterioration of market-based governance mechanisms; (iii) and a perverse managerial incentive to decrease corporate disclosure in a heightened litigation environment.",
keywords = "Acquisitions, Blockholders, Corporate disclosure, Corporate valuation, Information asymmetries, Judicial ideology, Law and finance, Lawsuits",
author = "Stefano Cassella and Rizzo, {A. Emanuele}",
note = "Funding Information: ☆ We are grateful to Ian Appel, Fabio Braggion, Thomas Chemmanur, Julio Crego, Marco Da Rin, Irem Demirci, Joost Driessen, Miguel Ferreira, SEC commissioner Robert J. Jackson Jr., Dirk Jenter, Brandon Julio (discussant), Jonathan Karpoff (discussant), Jose Liberti, Ping Liu, Song Ma, Alberto Manconi, Katie Moon, Jacopo Ponticelli, Amiyatosh Purnanandam, Stefano Rossi, Julien Sauvagnat, Rui Silva, Oliver Spalt, Noah Stoffman, and participants at the 2021 AFA, the 2020 SFS Cavalcade North America, the 2019 Spanish Finance Forum, the 2017 CEPR Annual Spring Symposium in Financial Economics, the 2017 FMA Europe Conference, the 2017 AsianFA Conference, and the 2017 Northern Finance Association Conference for their helpful comments and suggestions. The authors are responsible for any remaining errors or omissions Publisher Copyright: {\textcopyright} 2023 Elsevier B.V.",
year = "2023",
month = apr,
doi = "10.1016/j.jcorpfin.2023.102390",
language = "English",
volume = "79",
journal = "Journal of Corporate Finance",
issn = "0929-1199",
publisher = "Elsevier",
}