Lawyer CEOs

Henderson, M. Todd; Hutton, Irena; Jiang, Danling; Pierson, Matthew

doi:10.2139/ssrn.2923136

Lawyer CEOs

42 Pages Posted: 25 Feb 2017 Last revised: 7 Mar 2018

See all articles by M. Todd Henderson

Irena Hutton

Florida State University - College of Business

Danling Jiang

College of Business, Stony Brook University

Matthew Pierson

Wharton Research Data Services (WRDS)

Date Written: February 21, 2017

Abstract

We examine the value of CEOs with specialized professional skills by focusing on CEOs with law degrees and their effect on corporate litigation. We find that lawyer CEOs are associated with both lower litigation frequency and less severe litigation. This relation is observed for most of nine types of common corporate litigation. This reduction in litigation is achieved, in part, through a decrease in activities that can lead to litigation, such as earnings management, and an increase in legal oversight by directors with legal expertise. Moreover, CEOs with legal training are associated with higher value in firms with high litigation risk and growth firms.

Keywords: CEOs, litigation risk, corporate finance

Suggested Citation: Suggested Citation

Henderson, M. Todd and Hutton, Irena and Jiang, Danling and Pierson, Matthew, Lawyer CEOs (February 21, 2017). Available at SSRN: https://ssrn.com/abstract=2923136 or http://dx.doi.org/10.2139/ssrn.2923136