Study on the Influence of Litigation Risk on Chinese Listed Companies

DOI

10.2991/aebmr.k.200908.055How to use a DOI?

Keywords

law and finance, litigation risk, enterprise innovation, China’s listed companies, adverse selection

Abstract

In recent years, the number of lawsuits filed by Chinese listed companies has been on the rise. So does the scale of the amount involved. When a public company is involved in litigation, the potential uncertainty increases dramatically, threatening investment projects including innovation. This paper discusses the evolution of litigation risk, the factors affecting litigation risk and the impact of litigation risk on enterprise innovation. Results show that once the company is involved in lawsuit, it will face huge labor costs, litigation costs, as well as the compensation resulting from loss of the lawsuit, which seriously undermines its financial situation. Once cash flows tighten, management will cut non-rigid investment projects, such as research and development activities, to bring risks under control.

Copyright

© 2020, the Authors. Published by Atlantis Press.

Open Access

This is an open access article distributed under the CC BY-NC license (http://creativecommons.org/licenses/by-nc/4.0/).

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TY  - CONF
AU  - Ci Zhang
PY  - 2020
DA  - 2020/09/08
TI  - Study on the Influence of Litigation Risk on Chinese Listed Companies
BT  - Proceedings of the 3rd International Conference on Economy, Management and Entrepreneurship (ICOEME 2020)
PB  - Atlantis Press
SP  - 336
EP  - 340
SN  - 2352-5428
UR  - https://doi.org/10.2991/aebmr.k.200908.055
DO  - 10.2991/aebmr.k.200908.055
ID  - Zhang2020
ER  -