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The dark side of weakening shareholder litigation rights: Evidence from green patenting activities

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  • Mbanyele, William
  • Muchenje, Linda T

Abstract

Exploiting the staggered adoption of universal demand (UD) laws as a quasi-natural experiment and the difference in difference approach, we find that US firms in states that adopted UD laws reduced their green innovation output and quality relative to their counterparts. Moreover, the causal relationship is more pronounced for firms that had better external governance before the adoption of UD laws. We also document that firms’ information asymmetry dramatically increases after UD laws enforcement. Overall, our study reveals the negative consequences of weakening shareholder rights on social welfare outcomes like environmental innovation productivity.

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  • Mbanyele, William & Muchenje, Linda T, 2022. "The dark side of weakening shareholder litigation rights: Evidence from green patenting activities," Finance Research Letters, Elsevier, vol. 47(PB).
    • Handle: RePEc:eee:finlet:v:47:y:2022:i:pb:s1544612322000927
    DOI: 10.1016/j.frl.2022.102779
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    References listed on IDEAS

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    Cited by:

    1. Mbanyele, William & Muchenje, Linda Tinofirei, 2022. "Climate change exposure, risk management and corporate social responsibility: Cross-country evidence," Journal of Multinational Financial Management, Elsevier, vol. 66(C).
    2. Gao, Weiyan & Wang, Yuzhang & Wang, Fengrong & Mbanyele, William, 2024. "Do environmental courts break collusion in environmental governance? Evidence from corporate green innovation in China," The Quarterly Review of Economics and Finance, Elsevier, vol. 94(C), pages 133-149.
    3. Freund, Steven & Luu, Nguyen H. & Nguyen, Hien T. & Phan, Hieu V. & Trinh, Lan T.P., 2024. "Over-hedging in the shadow of weaker litigation threat," Finance Research Letters, Elsevier, vol. 69(PB).
    4. Mbanyele, William & Huang, Hongyun & Muchenje, Linda T. & Zhao, Jun, 2024. "How does climate regulatory risk influence labor employment decisions? Evidence from a quasi-natural experiment," China Economic Review, Elsevier, vol. 87(C).
    5. Liu, Sheng & Wang, Yukai, 2023. "Green innovation effect of pilot zones for green finance reform: Evidence of quasi natural experiment," Technological Forecasting and Social Change, Elsevier, vol. 186(PA).
    6. Zhao Dong & Haodong Xu & Zhifeng Zhang & Yipin Lyu & Yuqi Lu & Hongyan Duan, 2022. "Whether Green Finance Improves Green Innovation of Listed Companies—Evidence from China," IJERPH, MDPI, vol. 19(17), pages 1-23, August.
    7. Xu, Le & Yang, Lili & Li, Ding & Shao, Shuai, 2023. "Asymmetric effects of heterogeneous environmental standards on green technology innovation: Evidence from China," Energy Economics, Elsevier, vol. 117(C).

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    JEL classification:

    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • K22 - Law and Economics - - Regulation and Business Law - - - Business and Securities Law

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