Bourveau, Thomas; Brochet, François; Michael, Spira, Sven - 2014
Using securities lawsuits related to M&A as an industry shock, we examine whether litigation risk acts as an external … governance mechanism by disciplining managers' investment decisions. In the two years following an M&A lawsuit (a lawsuit where … peer firms respond to the increased litigation risk by reducing abnormally high investment expenditures. Finally, the …