Corporate Litigation in Specialized Business Courts

42 Pages Posted: 25 Sep 2015 Last revised: 5 Apr 2016

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)

Alexander de Roode

Robeco Asset Management, Quantitative Investment Research; Netspar

Date Written: March 25, 2016

Abstract

In US derivative cases, plaintiffs’ lawyer fees and monetary awards have a distorting effect on shareholder value. We evaluate the benefits of corporate litigation without these externalities using a dataset for the Netherlands between 2002 and 2013. We find significant abnormal returns within a short timespan surrounding the filing and resolution of M&A-related lawsuits. Over longer horizons, we document that resolutions have little impact on shareholder value. Moreover, our findings suggest that longer waiting times for court resolutions are costly. The evidence from the Netherlands supports the view that, in settings without strong distortions, derivative style litigation may enhance firm value.

Keywords: Corporate litigation, Dutch Enterprise Chamber inquiry proceedings, shareholder value, M&A lawsuits

JEL Classification: G34

Suggested Citation

McCahery, Joseph A. and de Roode, Alexander, Corporate Litigation in Specialized Business Courts (March 25, 2016). European Corporate Governance Institute (ECGI) - Law Working Paper No. 302/2015. Available at SSRN: https://ssrn.com/abstract=2664621 or http://dx.doi.org/10.2139/ssrn.2664621

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 the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

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

Alexander De Roode

Robeco Asset Management, Quantitative Investment Research ( email )

Rotterdam, 3011 AG
Netherlands

Netspar ( email )

P.O. Box 90153
Tilburg, 5000 LE
Netherlands

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
160
Abstract Views
903
rank
192,273
PlumX Metrics