Economics at your fingertips  

Fee-Shifting Bylaws: An Empirical Analysis

Jens Dammann

Journal of Law and Economics, 2022, vol. 65, issue 1, 1 - 37

Abstract: Shareholder litigation has long played a central but highly controversial role in American corporate governance. In 2014, the Delaware Supreme Court took a step that had the potential to dramatically reduce the amount of such litigation. In its landmark decision in ATP Tour, Inc. v. Deutscher Tennis Bund, the court embraced the legality of so-called fee-shifting bylaws. Such bylaws typically require plaintiff-shareholders to bear a corporation’s litigation expenses if their suit does not succeed. Only a year later, however, the Delaware legislature overruled ATP by promulgating a ban on fee-shifting provisions. From a policy perspective, the crucial question is whether allowing fee-shifting bylaws benefits shareholders. Although many scholars have weighed in on this issue, no empirical study has examined the ATP decision’s impact on shareholder wealth. This article fills that gap. Using a hand-collected data set on fee-shifting provisions, I show that the legalization of fee-shifting bylaws reduced shareholder wealth.

Date: 2022
References: Add references at CitEc
Citations: Track citations by RSS feed

Downloads: (external link) (application/pdf) (text/html)
Access to the online full text or PDF requires a subscription.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

Access Statistics for this article

More articles in Journal of Law and Economics from University of Chicago Press
Bibliographic data for series maintained by Journals Division ().

Page updated 2022-03-29
Handle: RePEc:ucp:jlawec:doi:10.1086/718163