PhD student publishes paper in top journal
13 September 2021
PhD student from the School of Accounting and Finance publishes paper in top journal
Chenchen Huang, a PhD student in finance at the School of Accounting and Finance, has published a paper titled "Shareholder Litigation Risk and Firms' Choice of External Growth" (co-authored by with School of Accounting and Finance professors Neslihan Ozkan and Fangming Xu) in the Journal of Financial and Quantitative Analysis.
The authors provide novel evidence showing that shareholder litigation risk influences firms’ choices of external growth strategies. Using staggered adoption of universal demand (UD) laws, they find that firms under the threat of litigation tend to choose corporate alliances over mergers and acquisitions (M&As).
This finding supports the view that alliances offer a low-risk, low-cost alternative to M&As for firms facing litigation risk. Moreover, alliance performance improves after the passage of UD laws, suggesting that firms can make better deal selections under reduced litigation threats.
Overall, the authors establish an unexplored link between litigation risk and firms’ choices of boundary-expanding transactions.
Access the full paper here.