The Home Court Advantage in International Corporate Litigation
Hong Kong University of Science & Technology - HKUST School of Business and Management
University of Melbourne - Department of Finance; Financial Research Network (FIRN)
Southern Utah University - Department of Economics and Finance
Journal of Law and Economics, 2006
Using a comprehensive sample of 2,361 public U.S. corporate defendants and 715 public foreign corporate defendants in U.S. federal courts in the period 1995-2000, we find that the market reaction at the announcement of a U.S. federal lawsuit is less negative for U.S. corporate defendants. We find that this market reaction is rational; U.S. firms are less likely to lose than foreign firms controlling for year, industry, type of litigation, size and profitability. This may still reflect a sample selection bias. We control for this bias, and the results remain. We thus cannot rule out that U.S. firms have a home court advantage in U.S. federal courts.
Number of Pages in PDF File: 58
Keywords: corporate litigation, event studies, discrimination
JEL Classification: G14, G15, K40, N20
Date posted: September 28, 2006
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