IDEAS home Printed from https://ideas.repec.org/a/eee/finlet/v79y2025ics154461232500546x.html

Corporate litigation risk and total factor productivity: The mechanism of financing constraints

Author

Listed:
  • Liu, Yan
  • Zheng, Yinglong
  • Li, Juan
  • Cheng, Xuemei

Abstract

This study, based on data from Chinese listed companies from 2008 to 2022, examines the impact of corporate litigation risk on firms' total factor productivity, while considering the mediating role of financing constraints. The empirical results indicate that corporate litigation risk suppresses firms' total factor productivity. Financing constraints serve as a mediating mechanism in the relationship between litigation risk and total factor productivity, with this mediating effect exhibiting heterogeneity between state-owned enterprises and private enterprises. Additionally, the impact of litigation risk on total factor productivity differs between state-owned and private enterprises.

Suggested Citation

  • Liu, Yan & Zheng, Yinglong & Li, Juan & Cheng, Xuemei, 2025. "Corporate litigation risk and total factor productivity: The mechanism of financing constraints," Finance Research Letters, Elsevier, vol. 79(C).
    • Handle: RePEc:eee:finlet:v:79:y:2025:i:c:s154461232500546x
    DOI: 10.1016/j.frl.2025.107283
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S154461232500546X
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.frl.2025.107283?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. Zhang, Lu & Peng, Fei & Shan, Yuan George & Chen, Yiping, 2023. "CEO social capital and litigation risk," Finance Research Letters, Elsevier, vol. 51(C).
    2. Ma, Sichao & Shen, Ji & Wang, Fanzhi & Wu, Wanting, 2022. "A tale of two Us: Corporate leverage and financial asset allocation in China," International Review of Financial Analysis, Elsevier, vol. 83(C).
    3. Wang, Ruixue & Deng, Xiangzheng & Gao, Yunxiao & Chen, Jiancheng, 2025. "Does regional economic development drive sustainable grain production growth in China? Evidence from spatiotemporal perspective on low-carbon total factor productivity," Socio-Economic Planning Sciences, Elsevier, vol. 98(C).
    4. Huang, Yao & Ma, Yueru & Ou, Jie & Ma, Jian, 2024. "Capital or burden? The impact of social networks on elderly care services consumption: Evidence from China," International Review of Economics & Finance, Elsevier, vol. 94(C).
    5. Hao, Yu & Gai, Zhiqiang & Wu, Haitao, 2020. "How do resource misallocation and government corruption affect green total factor energy efficiency? Evidence from China," Energy Policy, Elsevier, vol. 143(C).
    6. Zhao, Xin & Nakonieczny, Joanna & Jabeen, Fauzia & Shahzad, Umer & Jia, Wenxing, 2022. "Does green innovation induce green total factor productivity? Novel findings from Chinese city level data," Technological Forecasting and Social Change, Elsevier, vol. 185(C).
    7. Zhang, Haiyan & Dong, Shizheng, 2023. "Digital transformation and firms' total factor productivity: The role of internal control quality," Finance Research Letters, Elsevier, vol. 57(C).
    8. Hsu, Yu-Lin & Yang, Ya-Chih, 2022. "Corporate governance and financial reporting quality during the COVID-19 pandemic," Finance Research Letters, Elsevier, vol. 47(PB).
    9. Xu, Jian & Liu, Yu & Abdoh, Hussein, 2022. "Foreign ownership and productivity," International Review of Economics & Finance, Elsevier, vol. 80(C), pages 624-642.
    10. Ge, Chuanlu & Cheng, Hengsen & Niu, Qingrun & Yang, Miao, 2024. "The conjoint effects of corporate social responsibility performance and report tone on financial constraints: Evidence from China," Pacific-Basin Finance Journal, Elsevier, vol. 87(C).
    11. Wang, Zhen & Chu, Erming & Hao, Yukai, 2024. "Towards sustainable development: How does ESG performance promotes corporate green transformation," International Review of Financial Analysis, Elsevier, vol. 91(C).
    12. Deng, Xiang & Li, Weihao & Ren, Xiaohang, 2023. "More sustainable, more productive: Evidence from ESG ratings and total factor productivity among listed Chinese firms," Finance Research Letters, Elsevier, vol. 51(C).
    13. Liu, Shanmin & Zhuo, Yangyuan & Shen, Xinyue & Cai, Mengda & Yang, Ye, 2023. "The impact of declined social insurance contribution rate on enterprise total factor productivity: Evidence from China," International Review of Financial Analysis, Elsevier, vol. 87(C).
    14. Zhang, Shijun & Zhang, Meng & Meng, Shouwei, 2024. "Corporate transaction costs and corporate green total factor productivity," Finance Research Letters, Elsevier, vol. 61(C).
    15. Wang, Zhen & Chu, Erming & Hao, Yukai, 2024. "Retraction notice to “ Towards sustainable development: How does ESG performance promotes corporate green transformation”," International Review of Financial Analysis, Elsevier, vol. 95(PC).
    16. Chen Lin & Sibo Liu & Gustavo Manso, 2021. "Shareholder Litigation and Corporate Innovation," Management Science, INFORMS, vol. 67(6), pages 3346-3367, June.
    17. Chen, Yang & Yang, Shengping & Li, Quan, 2022. "How does the development of digital financial inclusion affect the total factor productivity of listed companies? Evidence from China," Finance Research Letters, Elsevier, vol. 47(PB).
    18. Yao, Wenyun & Zhang, Yi & Ma, Jingwen & Cui, Guanghui, 2023. "Does environmental regulation affect capital-labor ratio of manufacturing enterprises: Evidence from China," International Review of Financial Analysis, Elsevier, vol. 86(C).
    19. Hassan, M. Kabir & Alshater, Muneer M. & Atayah, Osama F., 2021. "Twenty-nine years of the Journal of International Review of Economics and Finance: A scientometric overview (1992–2020)," International Review of Economics & Finance, Elsevier, vol. 76(C), pages 1106-1125.
    20. Cheng, Yiran & Zhou, Xiaorui & Li, Yongjian, 2023. "The effect of digital transformation on real economy enterprises’ total factor productivity," International Review of Economics & Finance, Elsevier, vol. 85(C), pages 488-501.
    21. Huang, Yao & Ma, Yueru & Yang, Shuwen & Ma, Jian, 2024. "Loneliness, children's support, and demand for socialized elderly services: Empirical findings from China," Economic Analysis and Policy, Elsevier, vol. 84(C), pages 111-123.
    22. Zhang, Dongyang, 2021. "Green credit regulation, induced R&D and green productivity: Revisiting the Porter Hypothesis," International Review of Financial Analysis, Elsevier, vol. 75(C).
    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. Zhao, Zijian & Liu, Qiang & Qiu, Yunzhe, 2025. "Impact of supply chain digitalization on total factor productivity of agricultural enterprises," International Review of Financial Analysis, Elsevier, vol. 107(C).
    2. Wang, Jianbo & Niu, Dayong & Kang, Jing, 2025. "Can national industrial investment funds enhance enterprise resilience?," Finance Research Letters, Elsevier, vol. 85(PC).
    3. Luo, Zhenxiang, 2025. "Legal environment and corporate litigation risk: A study based on the perspective of media attention," Finance Research Letters, Elsevier, vol. 85(PE).

    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. Wang, Hongyan & Cheng, Jiandong & Zhou, Hang, 2025. "Tax administration informatization, financial tightened regulation, and firm productivity: A quasi-natural experiment based on the "Golden Tax Phase III project"," International Review of Economics & Finance, Elsevier, vol. 98(C).
    2. Dong, Xueqin & Dong, Dongdong & Huang, Lilong, 2025. "Enhancing corporate total factor productivity: The dual drivers of inclusive finance and technological progress," International Review of Financial Analysis, Elsevier, vol. 103(C).
    3. Xu, Runfang & Qiao, Yixiang & Lv, Hongjun, 2025. "Quality of accounting information and corporate green innovation performance," International Review of Economics & Finance, Elsevier, vol. 100(C).
    4. Zhang, Xiuqin & You, Meiqi, 2025. "Environmental justice, corporate green total factor productivity, and pollution control: A quasi-natural experiment based on the establishment of environmental courts," International Review of Economics & Finance, Elsevier, vol. 100(C).
    5. Ge, Shilong & Luo, Xiaodan & Li, Yuangang & Zheng, Lanxing, 2024. "The impact of green credit policy on total factor productivity of enterprises," International Review of Economics & Finance, Elsevier, vol. 95(C).
    6. Ma, Xuxia & Zhu, Shanshan, 2025. "Impact of venture capital on total factor productivity: Insights from enterprise-investment institution factor flows," Finance Research Letters, Elsevier, vol. 74(C).
    7. Xiao, De & Xu, Xiaotian, 2025. "Financial agglomeration, financing costs, and corporate ESG performance," Finance Research Letters, Elsevier, vol. 84(C).
    8. Liu, Tao & Wu, Han & Tu, Yongqian, 2025. "Threshold effects of capital intensity on relationship between legal system and rural economy," International Review of Economics & Finance, Elsevier, vol. 101(C).
    9. Ling, Dian & Li, Xiaohong, 2025. "Can green bonds enhance enterprises’ total factor productivity? The impacts of macroeconomic policy adjustment and ownership heterogeneity," Finance Research Letters, Elsevier, vol. 82(C).
    10. Mou, Kefen & Xu, Bing, 2024. "Digital finance, government regulation, and corporate capital market efficiency," Finance Research Letters, Elsevier, vol. 68(C).
    11. Li, Yuantian & Xu, Haoyu & Li, Huiru & Xu, Yingming, 2025. "Environmental regulation, opening up to the outside world, and regional green industry development: Policy effects and optimization strategies," Finance Research Letters, Elsevier, vol. 75(C).
    12. Xiao, Bingyu & Gong, Guangming & Xiao, Liang, 2025. "Does the work experience of regulatory leaders at local companies affect the productivity of state-owned enterprises? Evidence from China," Economic Modelling, Elsevier, vol. 145(C).
    13. Ren, Yuheng & Zhang, Jue & Wang, Xin, 2024. "How does data factor utilization stimulate corporate total factor productivity: A discussion of the productivity paradox," International Review of Economics & Finance, Elsevier, vol. 96(PC).
    14. Yang, Liuhui & Di, Jianguo, 2025. "Green supply chains and high-quality development of enterprises under tax reduction and fee decrease," International Review of Economics & Finance, Elsevier, vol. 98(C).
    15. Guidong Zhang & Jianlong Wang & Jiaqi He & Yong Liu, 2025. "Can Voluntary Environmental Regulation Improve Corporate ESG? New Evidence From Green Factories in China," Business Strategy and the Environment, Wiley Blackwell, vol. 34(7), pages 9513-9539, November.
    16. Yun, Di & Jia, Zeqin, 2025. "An investigation into the connection between green total factor productivity in agriculture and high-quality agricultural progress: Based on the mechanism of regional financial development," Finance Research Letters, Elsevier, vol. 81(C).
    17. Li, Xiaolu & Yue, Zhonggang & Wu, Yuchuan, 2025. "Impacts of financial technology on resource allocation efficiency: A perspective based on the distribution differences of Inter-enterprise total factor productivity," International Review of Economics & Finance, Elsevier, vol. 99(C).
    18. Tang, Li & Zhang, Teng & Wang, Jinglang & Liu, Baoliu & Huang, Yujie, 2025. "“Dual synergistic” transformation and corporate total factor productivity: Empirical evidence from China," Economic Analysis and Policy, Elsevier, vol. 85(C), pages 717-732.
    19. Xiong, Zhiqiao & Hu, Jin & Li, Wenfeng, 2024. "From policy to practice: Enhancing enterprise productivity through energy transition initiatives," Energy, Elsevier, vol. 311(C).
    20. Jiang, Yichi & Zhang, Xuanyue & Yao, Shujie, 2025. "On ESG and corporate employment decision: Evidence from Chinese listed firms in 2009–2022," Economic Analysis and Policy, Elsevier, vol. 85(C), pages 854-869.

    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:79:y:2025:i:c:s154461232500546x. 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.