European Business Schools Librarian's Group

HEC Research Papers Series,
HEC Paris

No 1443: Stock Ownership of Federal Judges and its Impact on Corporations

April M. Knill, Joseph "Fred" Kindelsperger and Alexei V. Ovtchinnikov
Additional contact information
April M. Knill: University of South Carolina - Darla Moore School of Business
Joseph "Fred" Kindelsperger: Florida State University - Department of Finance
Alexei V. Ovtchinnikov: HEC Paris

Abstract: We analyze conflicts of interests of federal judges in corporate litigation. Judges who own stock in industry peer firms of corporate litigants are more likely to render judgments benefiting those litigants. Specifically, in cases where litigants are defendants (plaintiffs), judge peer stock ownership is associated with a lower (higher) likelihood of a judgment for the plaintiff, nonmonetary awards, multiple awards, and a smaller (larger) amount awarded to the plaintiff. We show that our results cannot be explained by the judges’ superior industry knowledge stemming from their stock ownership. The results underscore the importance of mandates governing judge stock ownership.

Keywords: judge; stock ownership; peer; impartiality; litigation; justice

JEL-codes: D63; D73; G11; G18; G38; K41

53 pages, October 27, 2021

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