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Corporate litigation and the level of business risk bearing: Mediating effect of refinancing and its dynamic relationship

Author

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  • Zhang, Ni
  • Zhou, Lixin
  • Tian, Grace Li

Abstract

This study uses a sample of A-share listed companies in China from 2008 to 2023 to explore the relationship among refinancing, corporate litigation, and the level of corporate risk-taking. The research indicates a significant positive correlation between corporate litigation and the level of corporate risk-taking. Heterogeneity tests reveal that the impact of corporate litigation on the level of corporate risk-taking varies among companies of different sizes. Mechanism tests show that refinancing plays a mediating role in the relationship between corporate litigation and the level of corporate risk-taking, with this mediating effect exhibiting heterogeneity between heavily polluting and lightly polluting enterprises. Additionally, corporate social responsibility also serves as a mediating factor in the relationship between corporate litigation and the level of corporate risk-taking. This study provides empirical evidence and theoretical reference for understanding corporate risk-taking behavior in the context of legal litigation, as well as the roles of refinancing and corporate social responsibility, offering significant insights for the formulation of corporate risk management strategies and the decision-making of capital market participants.

Suggested Citation

  • 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).
    • Handle: RePEc:eee:reveco:v:101:y:2025:i:c:s1059056025003570
    DOI: 10.1016/j.iref.2025.104194
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