The Costs of Conflict Resolution and Financial Distress: Evidence from the Texaco-Pennzoil Litigation

Lawrence Summers and David Cutler

Scholarly Articles from Harvard University Department of Economics

Abstract: This article demonstrates that the dispute between Texaco and Pennzoil over the Getty Oil takeover reduced the combined wealth of the claimants on the two companies by over $3 billion. During the course of the litigation, Pennzoil's shareholders gained only one-sixth as much as Texaco's shareholders lost. When the litigation was settled, about two-thirds of the loss in wealth was regained. These fluctuations in value exceed most estimates of the direct costs of carrying on the litigation, and may reflect the disruption in the operations of Texaco caused by the dispute.

Date: 1988
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Published in Rand Journal of Economics

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Related works:
Journal Article: The Costs of Conflict Resolution and Financial Distress: Evidence from the Texaco-Pennzoil Litigation (1988)
Working Paper: The Costs of Conflict Resolution and Financial Distress: Evidence from the Texaco-Pennzoil Litigation (1987)
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