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The purpose of this paper is to review research on litigation in corporate finance.

This paper surveys studies on the estimation of litigation risk, litigation costs, stock reaction to lawsuit announcement, and the effect of litigation on corporate financial policies and outcomes.

The first section presents a survey of studies that estimate litigation risk. The authors then discuss a set of studies that focus on the various costs associated with litigation. The third area of review is about studies which estimate the market reaction to a lawsuit announcement. The next section surveys studies that examine the relation between litigation and a variety of corporate policies, behaviors, and outcomes. The authors then discuss the emerging literature on how corporate political connections can influence the outcome of litigation. The survey concludes with a brief summary and a discussion of suggestions for future research involving corporate litigation.

By providing an extensive review of the literature on litigation in corporate finance, this survey can help researchers to identify recent trends in litigation research and select promising new avenues of investigation in the field.

Because of our limited understanding of the incidence and effect of board busyness globally, the mixed evidence of the effect of board busyness obtained in the USA and the divergence of international patterns of director busyness from that observed in the USA, the author contends that there is a strong need to examine board busyness from a global perspective. The literature, however, does not examine the effect of board busyness on reported earnings quality and certainly does not analyze it internationally. Consequently, the purpose of this study is to examine the effect of multiple board appointments on the quality of a firm’s reported earnings.

The research design for this study is empirical. It uses both univariate and multivariate statistical analysis to examine historical corporate accounting, finance and governance data.

Consistent with the busyness hypothesis of corporate governance, the author finds that firms with a higher proportion of busy independent directors or busy CEOs manage their earnings more extensively. Further, the findings of this study present that firms with a higher proportion of busy independent audit committee members have poorer financial reporting quality. Using a sample of American Depository Receipts (ADRs), this study determines that the ineffectiveness of busy boards regarding earnings management is mitigated by the listing regulations imposed by US exchanges.

The author believes that this study offers new and important evidence regarding the debate whether busy directors provide knowledge, skill and corporate connections, or whether they are overextended and, thus, unable to fully perform their monitoring duties. This study shows that firms with busy directors are associated with poorer financial reporting quality and, consistent with the busyness hypothesis, are less effective as managerial monitors.

This study provides useful guidance regarding board design and the kinds of policies that firms should adopt regarding multiple boarding.

The social implications focus on the public policy implications regarding the importance of effective corporate governance in the reporting of financial wealth, wealth creation and wealth management.

This is the first study that examines the relation between board/committee busyness and corporate earnings management using a comprehensive set of international firms. Second, the author expands the analysis of audit committee into a new dimension: committee quality as captured by the busyness of its independent members. This study also contributes to the ongoing debate in the corporate finance literature regarding the reputation and busyness hypotheses of multiple directorships.

When a foreign firm cross-lists on an exchange in the US, it signals stronger investor protection. This is because cross-listing firms must comply with SEC and exchange regulations, thus producing stronger corporate governance. Consequently, cross-listing increases firm attractiveness to investors and places domestic rivals at a disadvantage. Rivals might respond by mimicking the governance changes resulting from cross-listing. The purpose of this paper is to examine whether firms respond to their rivals’ cross-listings through improvement in governance.

This study uses earnings management as a measure of governance for a set of international firms. The authors track the changes in governance of non-cross-listing firms following their rivals’ cross-listings. The authors employ an event study methodology to assess the spillover effect of a competitor’s cross-listing.

The authors find that rivals exhibit imitative improvements in their governance following a competitor’s cross-listing. This response is immediate and is the strongest in the year of cross-listing. Further, rivals with greater growth opportunities, lower market share, stronger past performance, and larger size demonstrate greater improvements in governance. Rivals make greater improvements in response to more rigorous Level III listings.

This study finds that cross-listing effects are underestimated. It is not only the investors of the listing-firms who benefit from the cross-listing, but also the investors of non-listing rival as competitors try to match the higher governance standard.

This study is the first that examines the intra-industry spillover effect of a cross-listing. This study also expands the analysis of the spillover effect in a new dimension: corporate governance.

The purpose of this paper is to analyze the value of corporate political connections resulting from the revolving door of employment between political office and the for-profit corporation. The authors test whether there is value to firms from political connections provided by the appointment of former politicians to corporate boards or management teams. The authors also test to see if passage through the door in the other direction, from the corporate world to public office, generates value for firms. Do firms whose former employees gain public office earn excess returns following their appointment or election to these positions?

The methodology used in this study focusses on an empirical analysis of the political connections of US firms over the sample period 1996-2011. The analysis emphasizes the wealth effects associated with the announcement of hiring former politicians to corporate boards or the gaining of political office by former corporate employees.

The authors find that politicians becoming corporate directors is 2.5 times more common than corporate executives gaining public office. The authors determine that industries with extensive government regulation most often hire former politicians. The authors find that the office held by former politicians matters. The authors find that longevity in a cabinet position is important while formal Congressional or Senate leadership positions are not. Surprisingly, the authors determine the longer politicians are out of office, the more value they are able to provide to the firm. Finally, the authors discover that firms which hire former politicians have significantly positive long-term abnormal returns, but firms whose managers enter politics do not.

This study is highly original in its examination of political connections resulting from door swing in both directions. Further, the analysis of longevity, time out of office, and position held adds to the contributions made by this study.

The role of art in a portfolio of investments is examined using Sotheby's art index as & proxy for returns on art investments. Historical data for portfolios of artwork and other financial securities over the period 1981 to 1990 are used to construct the optimal mean‐variance portfolio. The art investment receives over 36% of this portfolio. This large percentage can be traced in part to the low correlation of art returns to the returns of other financial securities. Clearly investments in art deserve the serious consideration of mean‐variance investors

For years suspicions have abounded that institutional investors are notoriously short‐sighted when it comes to making their investment decisions. Faced with performance assessment on a monthly if not daily basis, institutional investors need to show timely results and hence may be under considerable pressure to improve short‐term payoff at the expense of long‐term performance. Because institutions today now own more than 50% of corporate equity, they wield an increasingly powerful influence on companies. This influence has recently been magnified with the emergence of activist institutions, lead by certain institutional investors such as CALPERS or TIAA‐CREF. As a result, there have been concerns among stakeholder groups and scholars that company decision makers will themselves yield to pressures to forego investments in longer‐term opportunities.

The purpose of this paper is to investigate whether formal authority of the HR department has any impact on line managers’ evaluations of HR department effectiveness.

Two studies were conducted in Vietnam. Study 1 comprised a survey of 405 line managers to test the hypothesized model. Study 2 comprised a survey conducted with 155 line managers validated the findings from Study 1. Structural equation modeling and PROCESS macro were used to analyze the data.

Line managers’ perceptions of the HR department’s formal authority had a positive and indirect impact on HR department effectiveness through the HR department’s strategic involvement and influence. Public sector line managers tended to perceive their HR departments as possessing a higher level of formal authority than did their private sector counterparts.

This study extends the theory of political influence as it applies to the HR department. Specifically, the study provides empirical evidence of the influences of an organization’s political conditions on the perceptions of HR department effectiveness. This study also contributes to the extant literature on HRM in Vietnam by showing how Vietnam’s HR departments can utilize power and influence in accordance with specific ownership types.

Public sector HR managers could establish their formal authority among stakeholders as a way to enhance the recognition of HR department effectiveness. This can be done by relying on the presence of the traditional bureaucratic characteristics of the public sector which confer the HR department with formal authority.

The study contributes an understanding of the determinants of HR department effectiveness in the context of Vietnam. Research findings show that highly formal authority practices in the public sector affect the way line managers perceive the strategic involvement of the HR department. The more formal the authority, the more the public sector HR department is perceived to be involved in the strategic management process. Thus, formal authority is a prerequisite that public sector HR departments need to signal its importance among line managers. To have a long-term influencing role in the organization, the HR department in the public sector needs to develop its political and influencing skills. In contrast to this, the private sector HR department needs to develop a strategic partnership with line managers in order to increase its influence and perceived effectiveness.

Using social influence theory, this study examines the relationship between self-initiated expatriates' (SIE) political skill, as a measure of their social effectiveness, and cross-cultural adjustment (CCA). It also tests whether the host employer's psychological contract (PC) fulfillment mediates this relationship.

Partial least square structural equation modeling (covariance-based SEM) technique is employed to analyze a sample of 209 SIEs.

The study finds SIEs' political skill positively and significantly associated with SIEs' work-related adjustment. The relationship with interactional adjustment is only marginally significant. It also finds that SIEs' PC fulfillment mediates the relationship between SIEs' political skill and work-related adjustment. The mediation is marginally significant for the relationship between SIEs' political skill and general living adjustment.

The study adds to the literature on expatriates' skills and CCA by theorizing and testing the hitherto unexplored role of SIEs' political skill in their work and non-work CCA. It also theorizes and examines the host employer's PC fulfillment as a mediating mechanism, through which SIEs' political skill facilitates their CCA. Finally, it advances the literature on political skill by testing the construct's application in the cross-cultural and non-work domain.

Knight's Industrial Law Reports goes into a new style and format as Managerial Law This issue of KILR is restyled Managerial Law and it now appears on a continuous updating basis rather than as a monthly routine affair.