Ex Ante Choice of Jury Waiver Clauses in Mergers

37 Pages Posted: 6 Aug 2015 Last revised: 8 Dec 2015

See all articles by Darius Palia

Darius Palia

Rutgers University, Newark, School of Business-Newark, Department of Finance & Economics; Columbia University - Law School

Robert E. Scott

Columbia University - Law School

Date Written: August 5, 2015

Abstract

This paper examines empirically why sophisticated parties in some merger and acquisition deals choose to waive their right to jury trials and some do not. We examine merger agreements for a large sample of 276 deals for the 11-year period 2001 to 2011. We exclude private company deals and those where the choice of forum and law is Delaware. First, we find that 48.2% of the deals have jury waiver clauses. Second, we find that deals in which New York is chosen as the governing law and forum state are more likely to include a jury waiver clause. No other state has such an effect. Third, we find that contracts negotiated by counsel from high reputation law firms tend to include jury waiver clauses, and this effect is more significant for the acquirer’s law firm than for the target’s law firm. Fourth, we find strong evidence for the bargaining power hypothesis wherein larger acquirers that take over smaller targets are more likely to include jury waiver clauses. Finally, we find no evidence that lawyer familiarity, industry-effects, whether the acquirer was an international firm, or whether the deal was completed has a statistically significant impact on the likelihood of having a jury waiver clause.

Keywords: merger, acquisition, jury trials, merger agreements, jury waiver clause, ex ante choice

Suggested Citation

Palia, Darius and Scott, Robert E., Ex Ante Choice of Jury Waiver Clauses in Mergers (August 5, 2015). 17 American Law and Economics Review (Fall 2015); Columbia Law and Economics Working Paper No. 518; Columbia Public Law Research Paper No. 14-473. Available at SSRN: https://ssrn.com/abstract=2640410

Darius Palia

Rutgers University, Newark, School of Business-Newark, Department of Finance & Economics ( email )

111 Washington Street
MEC 134
Newark, NJ 07102
United States
973-353-5981 (Phone)
973-353-1233 (Fax)

Columbia University - Law School ( email )

435 W 116th St.
New York, NY 10027
United States

Robert E. Scott (Contact Author)

Columbia University - Law School ( email )

435 West 116th Street
New York, NY 10025
United States
212-854-0072 (Phone)

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