A Global Analysis of Corporate Litigation Risk and Costs

44 Pages Posted: 12 Dec 2018

See all articles by Matteo P. Arena

Matteo P. Arena

Marquette University

Stephen P. Ferris

University of Missouri at Columbia - Department of Finance

Date Written: November 20, 2018

Abstract

We analyze a unique hand-collected international sample of 475 corporate lawsuits involving 361 publicly-traded defendant firms headquartered in 16 developed countries to explore how country factors influence litigation risk, equity market value, lawsuit outcomes, and settlement costs. Unlike U.S.-focused studies, we do not find a significant relation between stock turnover, equity performance, and the probability of litigation. Defendant firms headquartered in civil law countries or countries with less efficient judiciary systems face lower litigation risk and costs as well as less share price decline at filing. Countries whose courts are less independent demonstrate a significant bias against foreign defendant firms.

Keywords: International Corporate Finance, Corporate Litigation, International Law

JEL Classification: G15, K20, K41

Suggested Citation

Arena, Matteo P. and Ferris, Stephen P., A Global Analysis of Corporate Litigation Risk and Costs (November 20, 2018). International Review of Law and Economics, Vol. 56, 2018. Available at SSRN: https://ssrn.com/abstract=3287905

Matteo P. Arena (Contact Author)

Marquette University ( email )

College of Business Administration
P.O. Box 1881
Milwaukee, WI 53201-1881
United States

Stephen P. Ferris

University of Missouri at Columbia - Department of Finance ( email )

214 Middlebush Hall
Columbia, MO 65211
United States
573-882-6272 (Phone)
573-884-6296 (Fax)

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