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Are courts effective monitors of corporate decisions? In a controversial landmark case,
the Delaware Supreme Court held directors personally liable for breaching their fiduciary
duties, signalling a sharp increase in Delaware?s scrutiny over corporate decisions. In our
event study, low-growth Delaware firms outperformed matched non-Delaware firms by 1% in the three day event window.
In contrast, high-growth Delaware firms under-performed by 1%. Contrary to previous literature, we conclude that court decisions can have large, significant and heterogeneous effects on firm value, and that rules insulating directors from court scrutiny benefit the fastest growing sectors of the economy.
Alibaba, the e-commerce giant that completed a record-breaking IPO in the United States in 2014 and in mid-2020 was valued at over $500 billion, is one of...
This article examines the economic underpinnings of the concept of corporate purpose, which has gained increasing attention from business academics,...