Business Courts and Firm Performance

43 Pages Posted: 27 Dec 2016 Last revised: 5 Jan 2017

Jens Dammann

University of Texas at Austin - School of Law

Date Written: January 4, 2017

Abstract

Does it matter for firm performance whether corporations have access to high-quality courts for litigating their internal affairs? To shed some light on this question, this paper focuses on the creation of business courts in various states between 1992 and 2015. Employing a difference-in-difference approach, I find that the creation of business courts is associated with a 2.8 to 3.8 percentage point increase in firm performance as measured by return on assets. Moreover, the creation of a business court is associated with a 0.3 to 0.5 percentage point higher likelihood of being the target in a completed takeover with positive abnormal returns for the target's shareholders. These results are both economically and statistically significant.

Keywords: courts, business courts

JEL Classification: G30, G32, G34, K22

Suggested Citation

Dammann, Jens, Business Courts and Firm Performance (January 4, 2017). U of Texas Law, Law and Econ Research Paper No. 564. Available at SSRN: https://ssrn.com/abstract=2889898

Jens Dammann (Contact Author)

University of Texas at Austin - School of Law ( email )

727 East Dean Keeton Street
Austin, TX 78705
United States

Paper statistics

Downloads
77
Rank
252,933
Abstract Views
333