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To Sue or Not To Sue?: Foreign-Sounding CEO Name and Class-Action Lawsuits

Author

Listed:
  • Ganji, Gajanan

    (The University of Texas at Arlington)

  • Kale, Arati

    (Providence College)

  • Kale, Devendra

    (University of Rhode Island)

Abstract

In this paper, we investigate if the perceived name-based ethnicity of CEOs has any relationship with the likelihood of shareholder class-action lawsuits. Using machine learning algorithms on CEO names, we develop an objective proxy of name-based ethnicity and find that firms managed by ‘foreign-sounding’ CEOs exhibit a lower likelihood of class-action lawsuits. Our results are robust to matched sample analysis, Heckman two-stage selection, alternate model specifications as well as use of an alternate proxy. We further find that succession of a foreign-sounding CEO by a non-foreign-sounding CEO increases the likelihood of class-action lawsuits. Our paper has important implications for firms, especially in high litigation industries or high litigation situations.

Suggested Citation

  • Ganji, Gajanan & Kale, Arati & Kale, Devendra, 2024. "To Sue or Not To Sue?: Foreign-Sounding CEO Name and Class-Action Lawsuits," American Business Review, Pompea College of Business, University of New Haven, vol. 27(1), pages 5-95, May.
    • Handle: RePEc:ris:ambsrv:0096
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    File URL: https://digitalcommons.newhaven.edu/americanbusinessreview/vol27/iss1/2/
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    More about this item

    Keywords

    Diversity; Class-Action Lawsuits; CEOs;
    All these keywords.

    JEL classification:

    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility

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