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Lawyer CEOs

Published online by Cambridge University Press:  06 December 2023

M. Todd Henderson,
Irena HuttonOpen the ORCID record for Irena Hutton[Opens in a new window],
Danling JiangOpen the ORCID record for Danling Jiang[Opens in a new window] and
Matthew Pierson
M. Todd Henderson
Affiliation:
University of Chicago Law School toddh@uchicago.edu
Irena Hutton*
Affiliation:
Florida State University College of Business
Danling Jiang
Affiliation:
Stony Brook University College of Business danling.jiang@stonybrook.edu
Matthew Pierson
Affiliation:
University of Pennsylvania The Wharton School Wharton Research Data Services mpiers@wharton.upenn.edu
*
ihutton@business.fsu.edu (corresponding author)
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Abstract

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We study when CEOs with legal expertise are valuable for firms. In general, lawyer CEOs are negatively associated with frequency and severity in employment civil rights, contract, labor, personal injury, and securities litigation. This effect is partly induced by the CEO’s management of litigation risk and reduction in other risky policies. Lawyer CEOs are further associated with an increase in gatekeepers providing additional legal oversight and a decrease in innovative activities with high litigation risk. Lawyer CEOs are more valuable during periods of enhanced compliance requirements and regulatory pressure and in industries with high litigation risk or better growth opportunities.

Information

Type
Research Article
Information
Journal of Financial and Quantitative Analysis , Volume 60 , Issue 2 , March 2025, pp. 580 - 616
Creative Commons
Creative Common License - CCCreative Common License - BY
This is an Open Access article, distributed under the terms of the Creative Commons Attribution licence (http://creativecommons.org/licenses/by/4.0), which permits unrestricted re-use, distribution and reproduction, provided the original article is properly cited.
Copyright
© The Author(s), 2023. Published by Cambridge University Press on behalf of the Michael G. Foster School of Business, University of Washington

Footnotes

The authors thank an anonymous referee, Allen Berger, Bernard Black, Dan Bradley, Adam Chilton, Albert Choi, Lauren Cohen, Umit Gurun, William Hubbard, Steve Kaplan, Kobi Kastiel, Vikramaditya Khanna, Anup Malani, Paul Malatesta (the editor), Roy Shapira, Charles Whitehead, Luigi Zingales, participants of 2016 Florida Finance Conference, 2016 Southern Finance Association, 2017 Financial Management Association, 2017 American Law and Economics Association, 2017 Society for Empirical and Legal Studies Asia, and 2017 Society for Empirical and Legal Studies meetings, and seminar participants at Florida State University, Stony Brook University, University of Alabama, University of Chicago, and New York University, for helpful discussions and valuable comments. We are responsible for all remaining errors and omissions.

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