 Value creation and value destruction in investor-state dispute arbitrationJosef Brada, Chunda Chen, Jingyi Jia, Ali Kutan and M. Fabricio Perez () Journal of Multinational Financial Management, 2022, vol. 63, issue C Abstract: We investigate whether investor-state arbitration under investment protection treaties is valuable to foreign investors, and whether international arbitration has effects on firm value that are like those seen in domestic litigation. An event study of abnormal returns when claims for arbitration are filed and adjudicated show that firms gain in market value both at the time they file for arbitration and when they receive an award. These gains in value generally exceed the size of the awards, indicating that success in arbitration provides the foreign investor not only monetary compensation but also non-monetary reputational effects that reduce costs of doing business abroad. Stock markets anticipate the outcomes of the arbitration process when claims are filed and when awards are announced. The effects on firm value of domestic litigation and investor-state arbitration differ, reflecting the institutional differences between the two methods of resolving disputes. Keywords: Bilateral investment treaties; Investor-State disputes; Firm value; Litigation; Foreign direct investment (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:mulfin:v:63:y:2022:i:c:s1042444x21000517 DOI: 10.1016/j.mulfin.2021.100728 Access Statistics for this article Journal of Multinational Financial Management is currently edited by I. Mathur and G. G. Booth More articles in Journal of Multinational Financial Management from Elsevier |
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