Corporate Litigation in Specialized Business Courts

In US derivative cases, plaintiffs? lawyer fees and monetary awards have a distorting
effect on shareholder value. We evaluate the benefits of corporate litigation without
these externalities using a dataset for the Netherlands between 2002 and 2013. We find
significant abnormal returns within a short timespan surrounding the filing and resolution
of M&A related lawsuits. Over longer horizons, we document that resolutions have little
impact on shareholder value. Moreover, our findings suggest that longer waiting times for court resolutions are costly. The evidence from the Netherlands supports the view that, in settings without strong distortions, derivative style litigation may enhance firm value.