Absence of Controlling Shareholders and Litigation Risk: Evidence from China

Using 2003-2018 data from China, this study analyzes the effect of absence of controlling shareholders on litigation risk. The results show that companies without controlling owners face higher litigation risk, an association that exists mainly in respondent companies. Upon further analysis, we find that this negative effect is more pronounced when the ownership is highly dispersed, and less pronounced for companies with greater analyst followings. This study enriches litigation risk literature from the perspective of absence of controlling shareholders, and enlightens other related studies that focus on emerging economies.