Securities Litigation Risk for Foreign Companies Listed in the U.S.

We study securities litigation risk faced by foreign firms listed on U.S. exchanges. We find that U.S. listed foreign companies experience securities class action lawsuits at about half the rate as do U.S. firms with similar levels of ex ante litigation risk. The lower rate appears to be driven partly by higher transaction costs in uncovering and pursuing litigation against foreign firms. However, once a lawsuit triggering event like an accounting restatement, missing management guidance, or a sharp stock price decline occurs, there is no difference in the litigation rates between a foreign and comparable U.S. firm. This suggests that effective enforcement of securities laws is constrained by transaction costs, and the availability of high quality information that reveals potential misconduct is an important determinant of a well-functioning litigation market for foreign firms listed in the U.S

Replication data for: Alternative Energy Stock Performance

In 2007, Irene Henriques and Perry Sadorsky wrote "Oil prices and the stock prices of alternative energy companies," a paper examining the relative importance of oil prices and technology stock performance when determining the performance of alternative energy companies. Using a vector autoregression model, they showed that oil prices were not all-powerful when determining alternative energy performance, and indeed, technology appeared to be considerably more important. We have extended the Henriques/Sadorsky model to include a breakdown of various types of alternative energy companies to show that while certain types of alternative energy companies do indeed follow this model of more compelling reactions to technology stock performance than oil price, certain types of alternative energy companies defy the aggregate pattern that Henriques and Sadorsky discovered