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Proximity and litigation: Evidence from the geographic location of institutional investors

Title:

Proximity and litigation: Evidence from the geographic location of institutional investors

Mazur, Mieszko, Salganik-Shoshan, Galla, Walker, Thomas and Wang, Jun (2018) Proximity and litigation: Evidence from the geographic location of institutional investors. Journal of Financial Markets . ISSN 13864181 (In Press)

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Official URL: http://dx.doi.org/10.1016/j.finmar.2018.05.002

Abstract

In this paper, we examine how the geographic distance between a firm and its largest institutional investors affects the firm's litigation risk. We show that geographic proximity between the firm and its largest institutional shareholders reduces the incidence of a lawsuit. Moreover, we find that geographic proximity affects the relationship between institutional investors' ownership and the litigation risk of their portfolio firms. These findings indicate that geographically proximate investors may have an informational advantage over investors who are located far away, and that this advantage manifests itself in more effective monitoring of firm management, and consequently, in lower litigation risk.

Divisions:Concordia University > John Molson School of Business > Finance
Item Type:Article
Refereed:Yes
Authors:Mazur, Mieszko and Salganik-Shoshan, Galla and Walker, Thomas and Wang, Jun
Journal or Publication:Journal of Financial Markets
Date:8 May 2018
Digital Object Identifier (DOI):10.1016/j.finmar.2018.05.002
Keywords:Litigation, Institutional investors, Geography, Monitoring, Corporate governance
ID Code:983948
Deposited By: MONIQUE LANE
Deposited On:14 Jun 2018 19:44
Last Modified:14 Jun 2018 19:44

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