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The old guard: CEO age and corporate litigation

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  • Malm, James
  • Adhikari, Hari P.
  • Krolikowski, Marcin W.
  • Sah, Nilesh B.

Abstract

Recent studies have indicated that older Chief Executive Officers (CEOs) tend to be more capable, ethical, and risk-averse as compared to their younger counterparts. Keeping this in mind, we use a unique hand-collected data on corporate lawsuits to examine whether CEO age influences corporate litigation. After controlling for several important variables and employing several estimation techniques, we find that firms with older CEOs face fewer lawsuits. The results continue to hold when we decompose lawsuits into securities and non-securities lawsuits. Decomposing the sample firms into high-tech and labor-intensive firms, we find the negative relationship between CEO age and corporate litigation to be more pronounced in labor-intensive firms. Our results are especially relevant in the post-SOX regulation period suggesting that older CEOs enforce regulations and reduce litigation risks for their firms. Overall, our results uncover an important channel through which firms can mitigate corporate litigation, namely older CEOs.

Suggested Citation

  • Malm, James & Adhikari, Hari P. & Krolikowski, Marcin W. & Sah, Nilesh B., 2021. "The old guard: CEO age and corporate litigation," Journal of Behavioral and Experimental Finance, Elsevier, vol. 31(C).
    • Handle: RePEc:eee:beexfi:v:31:y:2021:i:c:s2214635021000897
    DOI: 10.1016/j.jbef.2021.100545
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    Cited by:

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    3. Nadia Loukil & Ouidad Yousfi, 2022. "Do CEO’s traits matter in innovation outcomes?," Journal of International Entrepreneurship, Springer, vol. 20(3), pages 375-403, September.
    4. Malm, James & Soyeh, Kenneth W. & Kanuri, Srinidhi, 2023. "Litigation risk and corporate performance," Journal of Behavioral and Experimental Finance, Elsevier, vol. 37(C).

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