Firms operating in the United States face important litigation risk, yet little is known on how this risk affects financial decisions. I use a natural experiment to explore the effect of litigation risk on firms' hedging behavior. I find that firms are more likely to use financial derivatives following an exogenous increase in litigation risk. This finding is stronger in the subset of firms with higher distress costs, lower credit ratings, and higher legal concerns. My results imply that litigation risk can at least partially explain the use of financial derivatives.
| Identifer | oai:union.ndltd.org:arizona.edu/oai:arizona.openrepository.com:10150/621281 |
| Date | January 2016 |
| Creators | Alkhamis, Mohammad Bader, Alkhamis, Mohammad Bader |
| Contributors | Klasa, Sandy, Klasa, Sandy, Aradhyula, Satheesh, Bonaime, Alice, Williams, Ryan |
| Publisher | The University of Arizona. |
| Source Sets | University of Arizona |
| Language | en_US |
| Detected Language | English |
| Type | text, Electronic Dissertation |
| Rights | Copyright © is held by the author. Digital access to this material is made possible by the University Libraries, University of Arizona. Further transmission, reproduction or presentation (such as public display or performance) of protected items is prohibited except with permission of the author. |
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