Does Shareholder Litigation Risk Cause Public Firms to Delist? Evidence From Securities Class Action Lawsuits

摘要: This paper examines whether shareholder litigation contributes to the decline in U.S. stock market listings. We find that higher risk induces firms delist. establish causality by exploiting a 1999 decision Ninth Circuit Court reduced risk. The effect is at least partially driven indirect costs of litigation, and being private can significantly dampen threat litigation. Our results show balance between protecting rights preventing excessive influence firm’s remain public.