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A global analysis of corporate litigation risk and costs

Matteo P. Arena and Stephen P. Ferris

International Review of Law and Economics, 2018, vol. 56, issue C, 28-41

Abstract: We analyze a unique hand-collected international sample of 475corporate 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 (search for similar items in EconPapers)
JEL-codes: G15 K20 K41 (search for similar items in EconPapers)
Date: 2018
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