Conflict Resolution and the Role of Corporate Law Courts: An Empirical Study

32 Pages Posted: 23 Aug 2009 Last revised: 25 Sep 2009

See all articles by Joseph A. McCahery

Joseph A. McCahery

Tilburg University - School of Law; European Banking Center (EBC); Tilburg Law and Economics Center (TILEC); European Corporate Governance Institute (ECGI)

Erik P. M. Vermeulen

Tilburg University - Department of Business Law; Philips Lighting - Legal Department; Tilburg Law and Economics Center (TILEC); European Corporate Governance Institute (ECGI); Kyushu University - Graduate School of Law

Date Written: August 12, 2009

Abstract

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

Suggested Citation

McCahery, Joseph A. and Vermeulen, Erik P.M., Conflict Resolution and the Role of Corporate Law Courts: An Empirical Study (August 12, 2009). ECGI - Law Working Paper No. 132/2009. Available at SSRN: https://ssrn.com/abstract=1448192 or http://dx.doi.org/10.2139/ssrn.1448192

Joseph A. McCahery (Contact Author)

Tilburg University - School of Law; European Banking Center (EBC) ( email )

Warandelaan 2
Tilburg, 5000 LE
Netherlands
+31-(0)13-466-2306 (Phone)
+31-(0)13-466-2323 (Fax)

Tilburg Law and Economics Center (TILEC)

Warandelaan 2
Tilburg, 5000 LE
Netherlands

European Corporate Governance Institute (ECGI)

c/o ECARES ULB CP 114
B-1050 Brussels
Belgium

HOME PAGE: http://www.ecgi.org

Erik P.M. Vermeulen

Tilburg University - Department of Business Law ( email )

Philips Lighting - Legal Department ( email )

Amstelplein 2
Amsterdam
Netherlands

Tilburg Law and Economics Center (TILEC)

Warandelaan 2
Tilburg, 5000 LE
Netherlands

European Corporate Governance Institute (ECGI) ( email )

c/o ECARES ULB CP 114
B-1050 Brussels
Belgium

Kyushu University - Graduate School of Law ( email )

6-19-1, Hakozaki, Higashiku
Fukuoka, 812-8581
Japan

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