Federal judge ideology and managers' merge decisions

Abstract

Using the judge ideology to measure the securities litigation risk level, I examine whether the securities litigation risk can affect firms’ acquisition decisions. For the firms located in circuits with more liberal judges, I find firms are less likely to become a bidder. What’s more important, this effect is more pronounced for firms with more severe agency conflicts and more transparent information environment. Besides, the post-acquisition performances are also better for the acquirers exposed to higher litigation risk. Collectively, these pieces of evidence are more consistent with higher securities litigation risk disciplining managers to make higher-quality M&A decisions.

Date of Award	2020
Original language	English
Awarding Institution	The Hong Kong University of Science and Technology