Do shareholder litigations have spillover effects on peer companies from the perspective of financing constraints?

•Shareholder litigation has a significant impact on non-litigated listed companies.•Shareholder litigation exacerbates the financing constraints of non-litigated listed companies.•Spatial distance and cross-ownership can mitigate this spillover effect. This paper analyzes whether shareholder litigation has spillover effects on peer non-litigated companies from the perspective of financing constraints. The study found that shareholder litigation aggravated the degree of financing constraints of non-litigated listed companies in the same industry, showing significant spillover effects. After multiple robustness tests, this conclusion remains unchanged. The mechanism test found that shareholder litigation mainly affects financing constraints by inhibiting equity financing and bank loans of non-litigated listed companies in the same industry. Finally, the further analysis found that the spillover effect can be effectively weakened through spatial distance and cross-ownership.