Business Courts and Firm Performance

51 Pages Posted: 27 Dec 2016 Last revised: 18 Sep 2017

See all articles by Jens Dammann

Jens Dammann

University of Texas at Austin - School of Law; European Corporate Governance Institute (ECGI)

Date Written: September 17, 2017


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 1990 and 2015. Employing a difference-in-difference approach, I find that the creation of business courts is associated with a five to seven percent increase in Tobin's q as well as with a higher likelihood of being a target in a completed merger with positive cumulative abnormal returns for the target shareholders. These findings are both statistically and economically significant. I also find some evidence that business courts may have a positive impact on return on equity and return on assets, but those results are statistically significant only in some specifications.

Keywords: courts, business courts

JEL Classification: G30, G32, G34, K22

Suggested Citation

Dammann, Jens, Business Courts and Firm Performance (September 17, 2017). U of Texas Law, Law and Econ Research Paper No. 564, U of Texas Law, Public Law Research Paper No. 660, Available at SSRN: or

Jens Dammann (Contact Author)

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

727 East Dean Keeton Street
Austin, TX 78705
United States

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels

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