Federal judge ideology, securities class action litigation, and stock price crash risk

• Published in: Accounting and finance (Parkville) Vol. 64; no. 4; pp. 4131 - 4155
• Main Authors: Cui, Xiaoyu, Han, Jianlei, Kim, Jeong Bon, Qi, Baolei
• Format: Journal Article
• Language: English
• Published: Clayton Blackwell Publishing Ltd 01.12.2024
• Subjects: federal judge ideology; litigation risk; securities class action lawsuits; stock price crash risk

This study investigates whether and how federal judge ideology affects firm‐specific stock price crash risk. Using a comprehensive sample of US firms, we find a decline in the likelihood of future stock price crashes for firms headquartered in more liberal circuits. In identifying potential mechanis...