Corporate Litigation in Specialized Business Courts

Corporate Litigation in Specialized Business Courts

Joseph McCahery, Alexander de Roode

Series number :

Serial Number: 
302/2015

Date posted :

September 01 2015

Last revised :

October 07 2015
SSRN Share

Keywords

  • corporate litigation • 
  • Dutch Enterprise Chamber inquiry proceedings • 
  • shareholder value • 
  • M&A lawsuits
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.
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Authors

Real name:
Alexander de Roode
Professor
Real name:
Joseph McCahery
Research Member
Tilburg University Faculty of Law and Tilburg Law and Economics Center