Does Bilateral Investment Treaty Arbitration Have Any Value for Multinational Corporations?

29 Pages Posted: 22 Jan 2021

See all articles by Josef C. Brada

Josef C. Brada

Arizona State University (ASU) - Economics Department

Chunda Chen

Lamar University

Jingyi Jia

Southern Illinois University at Edwardsville - Department of Economics & Finance

Ali M. Kutan

Southern Illinois University at Edwardsville

Date Written: April 22, 2020

Abstract

Using event study methodology, we investigate whether bilateral investment protection treaties afford protection to foreign investors. Examining arbitral decisions for firms from six countries shows that firms that received awards from arbitrators gained in market value by as much as 3%. Per dollar awarded, firms gained over $20 in market value. Thus, we conclude that the system of arbitration does afford significant benefits to firms that can demonstrate that they have been injured by host governments who violated the terms of the relevant investor protection treaty. We also find some evidence that arbitral decisions are anticipated by stock markets.

JEL Classification: F23, G14, K12, K33

Suggested Citation

Brada, Josef C. and Chen, Chunda and Jia, Jingyi and Kutan, Ali M., Does Bilateral Investment Treaty Arbitration Have Any Value for Multinational Corporations? (April 22, 2020). BOFIT Discussion Paper No. 10/2020, Available at SSRN: https://ssrn.com/abstract=3764765

Josef C. Brada (Contact Author)

Arizona State University (ASU) - Economics Department ( email )

Box 873806
Tempe, AZ 85287-3806
United States
602-965-6524 (Phone)
602-965-0748 (Fax)

HOME PAGE: http://www.mesharpe.com/eee_main.htm

Chunda Chen

Lamar University ( email )

Beaumont, TX 77710
United States

Jingyi Jia

Southern Illinois University at Edwardsville - Department of Economics & Finance ( email )

Edwardsville, IL 62026
United States

Ali M. Kutan

Southern Illinois University at Edwardsville ( email )

Department of Economics and Finance AH-3141
Edwardsville, IL 62026-1102
United States
618-650-3473 (Phone)
618-650-3047 (Fax)

HOME PAGE: http://https://ideas.repec.org/e/pku30.html

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