IDEAS home Printed from https://ideas.repec.org/a/eee/finlet/v55y2023ipas1544612323001563.html

Enterprise litigation risk and enterprise performance

Author

Listed:
  • He, Hui
  • Shi, Wei

Abstract

With the continuous improvement of China's legal system, corporate litigation risk has become a hot topic of academic research. This paper selects data from 2011 to 2020 to explore the impact of litigation risk on corporate performance. It further investigates the impact of litigation risk on corporate performance through the level of debt financing. It is found that: the higher the corporate litigation risk, the lower the level of corporate performance; the higher the level of internal controlling and analyst following, the lower the effect of litigation risk on corporate performance; the mediating effect shows that litigation risk is transmitted negatively to corporate performance through corporate debt financing ability.

Suggested Citation

  • He, Hui & Shi, Wei, 2023. "Enterprise litigation risk and enterprise performance," Finance Research Letters, Elsevier, vol. 55(PA).
    • Handle: RePEc:eee:finlet:v:55:y:2023:i:pa:s1544612323001563
    DOI: 10.1016/j.frl.2023.103783
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1544612323001563
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.frl.2023.103783?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to

    for a different version of it.

    References listed on IDEAS

    as
    1. Li, Tianshi & Yang, Tina & Zhu, Jigao, 2022. "Directors’ and officers’ liability insurance: Evidence from independent directors’ voting," Journal of Banking & Finance, Elsevier, vol. 138(C).
    2. Mohammad S. Uddin & Guotai Chi & Mazin A. M. Al Janabi & Tabassum Habib, 2022. "Leveraging random forest in micro‐enterprises credit risk modelling for accuracy and interpretability," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 27(3), pages 3713-3729, July.
    3. Pengpeng Yue & Aslihan Gizem Korkmaz & Zhichao Yin & Haigang Zhou, 2022. "The rise of digital finance: Financial inclusion or debt trap," Papers 2201.09221, arXiv.org.
    4. Hu, Yuanyuan & Fang, Jiali, 2022. "Peer Effects in Directors’ and Officers’ Liability Insurance: Evidence from China," Finance Research Letters, Elsevier, vol. 47(PB).
    5. Fahad Khalid & Juncheng Sun & Guanhua Huang & Chih-Yi Su, 2021. "Environmental, Social and Governance Performance of Chinese Multinationals: A Comparison of State- and Non-State-Owned Enterprises," Sustainability, MDPI, vol. 13(7), pages 1-21, April.
    6. Niu, Geng & Jin, XiaoShu & Wang, Qi & Zhou, Yang, 2022. "Broadband infrastructure and digital financial inclusion in rural China," China Economic Review, Elsevier, vol. 76(C).
    7. Bian, Wenlong & Ji, Yang & Wang, Peng, 2021. "The crowding-out effect of central bank digital currencies: A simple and generalizable payment portfolio model," Finance Research Letters, Elsevier, vol. 43(C).
    8. Do, Trung K., 2022. "Corporate social responsibility and default risk: International evidence," Finance Research Letters, Elsevier, vol. 44(C).
    9. Yue, Pengpeng & Korkmaz, Aslihan Gizem & Yin, Zhichao & Zhou, Haigang, 2022. "The rise of digital finance: Financial inclusion or debt trap?," Finance Research Letters, Elsevier, vol. 47(PA).
    10. Jan Dvorsky & Jaroslav Belas & Beata Gavurova & Tomas Brabenec, 2021. "Business risk management in the context of small and medium-sized enterprises," Economic Research-Ekonomska Istraživanja, Taylor & Francis Journals, vol. 34(1), pages 1690-1708, January.
    11. Zhen Huang & Weiwei Gao, 2021. "Stock market liberalization and firm litigation risk——A quasi-natural experiment based on the Shanghai-Hong Kong Stock Connect policy," Applied Economics, Taylor & Francis Journals, vol. 53(48), pages 5619-5642, October.
    12. Wellalage, Nirosha Hewa & Kumar, Vijay & Hunjra, Ahmed Imran & Al-Faryan, Mamdouh Abdulaziz Saleh, 2022. "Environmental performance and firm financing during COVID-19 outbreaks: Evidence from SMEs," Finance Research Letters, Elsevier, vol. 47(PA).
    13. Liang Chen & Tian Yuan & Richard J. Cebula & Wang Shuangjin & Maggie Foley, 2021. "Fulfillment of ESG Responsibilities and Firm Performance: A Zero-Sum Game or Mutually Beneficial," Sustainability, MDPI, vol. 13(19), pages 1-17, October.
    14. Jiaqi Luo & Mingxiao Bi & Dandan Jia, 2022. "Corporate Social Responsibility Risk and Firm Performance: A Network Perspective," IJFS, MDPI, vol. 10(2), pages 1-20, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Lai, Jieji & Hu, Shiyang, 2024. "Bankruptcy judicial system reform and corporate financial litigation risk: A quasi-natural experiment in China," Finance Research Letters, Elsevier, vol. 62(PB).
    2. Zhang, Huatao & Jiang, Bolan & Zhang, Bao, 2025. "The impact of supply chain transparency on corporate litigation risks: An analysis based on ESG dimensions," Finance Research Letters, Elsevier, vol. 85(PD).
    3. Guo, Heng, 2023. "Enterprise litigation risk and risk taking," Finance Research Letters, Elsevier, vol. 58(PA).
    4. Ji, Tuo & Cai, Dong, 2024. "Major shareholder equity pledge and litigation risk," Finance Research Letters, Elsevier, vol. 65(C).
    5. Ma, Haiyan & Ma, Xiaoning & Lei, Xue & Jiang, Yu & Li, Yuan, 2026. "When lawsuits speak louder: Litigation risk and corporate financing constraints," Economic Analysis and Policy, Elsevier, vol. 89(C), pages 578-590.
    6. Qu, Shawn, 2024. "Litigation risk and corporate philanthropy: A managerial perspective analysis," Finance Research Letters, Elsevier, vol. 62(PA).
    7. Qu, Shawn, 2024. "Costs may be a blessing in disguise: Litigation risk and greenwashing," Finance Research Letters, Elsevier, vol. 62(PA).
    8. Iftikhar, Kainat & Bagh, Tanveer & Shabbir, Muhammad Nadir, 2025. "The dichotomy of corporate litigation risk in shaping ESG disclosure: Does green innovation matter?," Research in International Business and Finance, Elsevier, vol. 75(C).
    9. Lu, Yingchao & Chang, Hailing & Zhou, Yadan, 2025. "The impact of consumer complaints on corporate digital transformation," International Review of Economics & Finance, Elsevier, vol. 101(C).
    10. Qi, Meng & Wu, Wei & Yan, Yue & Wu, Shuying & Ji, Zheng, 2025. "Do legal advisors boost M&A performance," Finance Research Letters, Elsevier, vol. 79(C).
    11. Li, Aimin, 2024. "Judicial local protection and corporate litigation outcomes: A study based on legal big data," Finance Research Letters, Elsevier, vol. 66(C).
    12. Kainat Iftikhar & Can Yang & Tanveer Bagh, 2026. "Litigation risk and corporate reputation in emerging market: the role of green innovation," Risk Management, Palgrave Macmillan, vol. 28(1), pages 1-41, February.
    13. Zhang, Ying & Zhang, Qianwen, 2025. "Goodwill impairment and corporate innovation investment," International Review of Financial Analysis, Elsevier, vol. 97(C).
    14. Zhang, Ni & Zhou, Lixin & Tian, Grace Li, 2025. "Corporate litigation and the level of business risk bearing: Mediating effect of refinancing and its dynamic relationship," International Review of Economics & Finance, Elsevier, vol. 101(C).
    15. Zheng, Yaoqi, 2025. "Enterprise litigation risk, executive characteristics and corporate foreign investment," Finance Research Letters, Elsevier, vol. 86(PF).
    16. Ying Ke & Yueqi Wen & Lili Teng, 2025. "Chain Leader Policy and Corporate Environmental Sustainability: A Multi-Level Analysis of Greenwashing Mitigation Mechanisms," Sustainability, MDPI, vol. 17(19), pages 1-45, October.
    17. Le Thanh Ha, 2025. "Deploying green macroprudential policies to promote environmental health: new findings from panel VAR for international database," Environment Systems and Decisions, Springer, vol. 45(3), pages 1-21, September.
    18. Zhang, Huaqing & Wang, Miao & Li, Zhi & Zhang, Hua, 2024. "Financial mismatch and corporate litigation risk," Finance Research Letters, Elsevier, vol. 67(PA).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Xu, Dandan & Guo, Dongli & Yue, Pengpeng & Li, Mengshi, 2024. "Household green consumption: Does digital inclusion matter?," International Review of Financial Analysis, Elsevier, vol. 91(C).
    2. Li, Yuantian & Xu, Haoyu & Li, Huiru & Xu, Yingming, 2025. "Digital economy, environmental regulations, and green economic development," Finance Research Letters, Elsevier, vol. 75(C).
    3. Wang, Bing & Liu, Yanyan & Yang, Xiangyu, 2024. "Digital economy and urban entrepreneurial activity," Finance Research Letters, Elsevier, vol. 66(C).
    4. Xu, Guiyang, 2025. "KIBS Clustering, digital financial inclusion, and economic growth quality," Finance Research Letters, Elsevier, vol. 72(C).
    5. Yang, Zongzhi & Li, Yali & Wu, Chanti, 2025. "Population aging, fintech, and agricultural economic resilience," International Review of Economics & Finance, Elsevier, vol. 97(C).
    6. Li, Jialong & Li, Jiao, 2025. "Does climate risk impact household consumption? Evidence from China," Economic Modelling, Elsevier, vol. 152(C).
    7. Jiang, Lixia & Cao, Xiaojing & Wang, Zeyu & Zhan, Yun & Zhang, Jiali & Chen, Shuai, 2025. "Promoting energy saving and emission reduction benefits in small and medium-sized enterprises supply chains through green finance - Evidence based on artificial intelligence intervention," International Review of Financial Analysis, Elsevier, vol. 102(C).
    8. Abbas, Jaffar & Balsalobre-Lorente, Daniel & Amjid, Muhammad Asif & Al-Sulaiti, Khalid & Al-Sulaiti, Ibrahim & Aldereai, Osama, 2024. "Financial innovation and digitalization promote business growth: The interplay of green technology innovation, product market competition and firm performance," Innovation and Green Development, Elsevier, vol. 3(1).
    9. Li, Lanbing & Zhao, Jiawei & Yang, Yuhan & Ma, Dan, 2025. "Artificial intelligence and green development well-being: Effects and mechanisms in China," Energy Economics, Elsevier, vol. 141(C).
    10. Fang, Xing & Sun, Yiyao, 2025. "Does digital transformation affect enterprise executives' remuneration governance?," Finance Research Letters, Elsevier, vol. 77(C).
    11. Zhou, Ling & Li, Yang, 2025. "Commercial credit supply in the digital economy era: Impact mechanisms and differences in property rights," International Review of Financial Analysis, Elsevier, vol. 99(C).
    12. Heyert, Axelle & Weill, Laurent, 2024. "Is financial inclusion a source of happiness?," International Review of Financial Analysis, Elsevier, vol. 96(PB).
    13. Lee, Chien-Chiang & Lou, Runchi & Wang, Fuhao, 2023. "Digital financial inclusion and poverty alleviation: Evidence from the sustainable development of China," Economic Analysis and Policy, Elsevier, vol. 77(C), pages 418-434.
    14. Liu, Liang & Ju, Zhen, 2025. "Digital finance and retirement planning: The role of information cost reduction and trust enhancement channels," Economic Modelling, Elsevier, vol. 144(C).
    15. Zhou, Jun & Zhang, Xueyi & Korkmaz, Aslihan Gizem & Li, Youwei & Yue, Pengpeng, 2025. "Entrepreneurship in the digital era," Research in International Business and Finance, Elsevier, vol. 78(C).
    16. Yang, Wenshu & Han, Miao & Hwang, Yong-Sik, 2025. "Strategic differentials, digital finance, and transnational enterprise performance," Finance Research Letters, Elsevier, vol. 80(C).
    17. Ding, Qiaoying & He, Wensheng & Deng, Yanfang, 2025. "Can tax reduction incentive policy promote corporate digital and intelligent transformation?," International Review of Financial Analysis, Elsevier, vol. 99(C).
    18. Behice Canatan & Ayşe Akboz Caner & Gökhan Özbilge, 2024. "Dynamics of Digital Financial Inclusion in Türkiye," Istanbul Business Research, Istanbul University Business School, vol. 53(2), pages 185-200, September.
    19. Liu, Jintao & Wang, Xiuhai, 2025. "Exploring the driving effect of the digital economy on rural labor force's occupational transformation: Based on analysis of CFPS panel data," International Review of Financial Analysis, Elsevier, vol. 101(C).
    20. Kodongo, Odongo, 2024. "Financial inclusion effects of engaging with the fintech ecosystem," International Review of Economics & Finance, Elsevier, vol. 96(PB).

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:finlet:v:55:y:2023:i:pa:s1544612323001563. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/frl .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.