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Enterprise litigation risk, executive characteristics and corporate foreign investment

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  • Zheng, Yaoqi

Abstract

This paper systematically explores the impact mechanism and boundary conditions of litigation risk on firms' outward foreign direct investment (OFDI), using Chinese Shanghai and Shenzhen A-share listed companies from 2009 to 2023 as the research subjects. The study finds that litigation risk significantly inhibits firms' OFDI; managers with overseas backgrounds, due to heightened compliance awareness and excessive vigilance towards legal differences, exacerbate the inhibitory effect of litigation on investment; and the analysis of property rights heterogeneity reveals that private enterprises are more sensitive to litigation risk due to their resource vulnerability and profit orientation, while state-owned enterprises, influenced by policy missions and government endorsements, show weaker sensitivity in their investment decisions to litigation risk.

Suggested Citation

  • Zheng, Yaoqi, 2025. "Enterprise litigation risk, executive characteristics and corporate foreign investment," Finance Research Letters, Elsevier, vol. 86(PF).
    • Handle: RePEc:eee:finlet:v:86:y:2025:i:pf:s1544612325020732
    DOI: 10.1016/j.frl.2025.108819
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    References listed on IDEAS

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