Abstract

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

October 29, 2014

Management Science, Forthcoming

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. We measure political culture using the political contributions of top managers, firm PACs, and its local residents. We show that firms with Republican culture are more likely to be the subject of civil rights, labor and environmental litigation than Democratic firms, consistent with the Democratic ideology that emphasizes equal rights, labor rights, and environmental protection. However, firms with Democratic culture are more likely to be the subject of litigation related to securities fraud and intellectual property rights violations than Republican firms whose Party ideology stresses self-reliance, property rights, market discipline, and limited government regulation. Upon litigation filing, both types of firms experience similar announcement reaction, which suggests that the observed relation between political culture and corporate misconduct is unlikely to reflect differences in expected litigation costs.

Number of Pages in PDF File: 67

Keywords: Political values, culture, litigation, managerial misconduct

JEL Classification: G34, M14, D21, A13, K22, K31, K32

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Date posted: March 4, 2012 ; Last revised: November 8, 2014

Suggested Citation

Hutton, Irena and Jiang, Danling and Kumar, Alok, Political Values, Culture, and Corporate Litigation (October 29, 2014). Management Science, Forthcoming. Available at SSRN: http://ssrn.com/abstract=2015692 or http://dx.doi.org/10.2139/ssrn.2015692

Contact Information

Irena Hutton (Contact Author)
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
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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