Business, Management and Accounting
2 years ago

General counsel in top management reduces securities class action lawsuits risk.

Corporate Governance An International Review
Does the presence of a general counsel in top management affect securities class action lawsuits?
Audrey Wen-hsin Hsu, Sophia Liu

Paper Summary

Having a general counsel in a company's top management team reduces the likelihood of facing securities class action lawsuits. Companies with a general counsel experience more positive outcomes in terms of market reaction, lawsuit duration, dismissal, and settlement approval. This shows that having a general counsel can help prevent legal issues and improve governance. The Sarbanes-Oxley Act recognizes the importance of the general counsel's role in monitoring decisions and reducing corporate litigation risk.

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