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http://ssrn.com/abstract=2015692
 
 

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Political Values, Culture, and Corporate Litigation


Irena Hutton


Florida State University - College of Business

Danling Jiang


Florida State University - The College of Business

Alok Kumar


University of Miami - School of Business Administration

November 29, 2012


Abstract:     
Using one of the largest samples of litigation data to date, we examine whether the political culture of a firm determines its propensity for corporate misconduct. Our measure of political culture is based on the political contributions of top managers, firm PACs, and its local residents. We find that, consistent with the Democratic ideology that places greater value on equal opportunity, humanitarianism, and protection of the environment, firms with Democratic culture are less likely to be the subject of environmental, labor, or civil rights-related litigation. In contrast, consistent with the core Republican value of self-reliance that supports business, property rights, market discipline, and limited government regulation, firms with Republican culture are less likely to be the subject of litigation related to securities fraud and intellectual property rights violations. Upon litigation filing, firms with Republican culture typically experience a more negative market reaction. These findings suggest that although political culture determines the propensity of different types of corporate misconduct, these cross-sectional differences are not fully recognized by stock market participants.

Number of Pages in PDF File: 44

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Date posted: March 4, 2012 ; Last revised: November 30, 2012

Suggested Citation

Hutton, Irena and Jiang, Danling and Kumar, Alok, Political Values, Culture, and Corporate Litigation (November 29, 2012). Available at SSRN: http://ssrn.com/abstract=2015692 or http://dx.doi.org/10.2139/ssrn.2015692

Contact Information

Irena Hutton
Florida State University - College of Business ( email )
821 Academic Way
Tallahassee, FL 32306-1110
United States
850.645.1520 (Phone)
Danling Jiang
Florida State University - The College of Business ( email )
821 Academic Way
P.O. Box 3061110
Tallahassee, FL 32306-1110
United States
(850)645-1519 (Phone)
HOME PAGE: http://mailer.fsu.edu/~djiang/
Alok Kumar (Contact Author)
University of Miami - School of Business Administration ( email )
514 Jenkins Building
Department of Finance
Coral Gables, FL 33124-6552
United States
305-284-1882 (Phone)
HOME PAGE: http://moya.bus.miami.edu/~akumar
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