Do Women Managers Keep Firms out of Trouble? Evidence from Corporate Litigation and Policies

Binay K. Adhikari, The University of Texas Rio Grande Valley
Anup Agrawal
James Malm

© 2018 Elsevier B.V. All rights reserved. Original published version available at https://doi.org/10.1016/j.jacceco.2018.09.004

Abstract

We find that firms where women have more power in the top management team, measured by female executives’ plurality and pay slice, face fewer operations-related lawsuits. This effect is robust to several treatments of endogeneity and does not appear to be driven by female executives' greater willingness to settle the cases. Evidence from a simultaneous equations approach suggests that firms where women executives have more power avoid lawsuits partly by avoiding some risky but value-increasing firm policies, such as more aggressive R&D, intensive advertising, and policies inimical to other parties.