Managerial liability and corporate innovation: Evidence from a legal shock

• Main Authors: WANG, Xin, XU, Yongxin, ZHANG, Liandong, ZHENG, Gaoping
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2021
• Subjects: D&O liability; legal liability; directors; officers; corporate innovation; Nevada corporate law; innovation outputs; litigation risk; innovative industries; governance; exchange-listed firms; over-the-counter listed firms; risky innovation; explorative innovation; sustainable growth; litigation environment; Accounting
• Online Access: https://ink.library.smu.edu.sg/soa_research/2006
• Institution: Singapore Management University

Despite a longstanding debate over the pros and cons of imposing legal liability on directors and officers (D&Os), there is limited evidence on how D&O liability affects corporate innovation. We study this question by exploiting Nevada's 2001 corporate law change that dramatically lower...