CEO social capital and litigation risk

We examine the association between chief executive officer (CEO) social capital and firm litigation risk. Employing a sample of Chinese listed firms from 2008 to 2017, we find that firms with high CEO social capital relate to lower litigation risk. Further analyses show that the negative correlation only exists for firms that are non-state-owned enterprises, are located in lowmarketized regions, face periods of economic downturns, have high managerial ownership, and retain well-connected independent directors on boards. Our results hold after a battery of robustness checks. Together, these findings provide unique evidence to support the beneficial role of CEO social capital in risk reduction.

Automated summary

The study reveals a correlation between CEO social capital and lower litigation risk in Chinese listed firms. This correlation only exists for non-state-owned enterprises in low marketized regions facing economic downturns, with high managerial ownership and well-connected independent directors on their boards.