Conflict Resolution and the Role of Corporate Law Courts: An Empirical Study
32 Pages Posted: 23 Aug 2009 Last revised: 25 Sep 2009
Date Written: August 12, 2009
We study private enforcement of corporate law in a civil law jurisdiction that has a relatively weak company law regime. First, we develop a benchmark for how effective the court is in resolving confl icts in a speedy and decisive manner. We base our findings on a hand-collected database of filings of legal actions brought against companies between 2002-2008. The main conclusion is that the grant of injunctive relief provides an incentive for the parties to the lawsuit to seek out settlements and thereby prevent further costly and unwanted litigation. Our results emphasize the importance of the private enforcement of intra-firm disputes and the effectiveness of a specialized court in providing protection to minority shareholders.
Keywords: legal procedure, private enforcement, corporate law, derivative actions
JEL Classification: K22, K4, K41
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