While small, founder-dominated firms may be less willing to operate in an environment with a high risk of litigation, this risk may vary widely among firms and is not considered an important factor regarding the founder-dominated governance configuration.
Companies that don't follow them could face a competitive or public relations disadvantage, or a higher risk of litigation, he says: "Following government standards is a good way to rebut claims of negligence". One advantage of the order is that it requires the government to clean up its act by sharing information more seamlessly across agencies.
The collegial governance configuration is most likely to occur in PSFs that, in addition to the above factors, operate in an environment that poses a low risk of litigation for the PSF.
Mr. Phillips said the widespread use of releases was a relatively recent step by the company, and that it was a response to what it regarded as a greater risk of litigation.
We also demonstrate that a greater risk of litigation by third parties increases the likelihood of a "sin" firm instigating CSR reports, while variations in ownership structure do not.
John C. Coffee Jr., a professor of corporate law at Columbia University, said American companies generally faced a higher risk of litigation than overseas competitors, largely because the court systems differ significantly.
A high risk of litigation would call for formalization and standardization, leading firms closer to the managerial governance configuration.
Following Greenwood and Empson (2003) we can also suggest that a rising risk of litigation will eventually result in change of ownership locus (see Fama and Jensen 1983b).
The managerial governance typically occurs in firms that face a high risk of litigation, not least because low service quality is more easily detected in commoditized services than in highly customized services, and thus becomes the cause of litigation.
