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A global analysis of corporate litigation risk and costs

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  • Arena, Matteo P.
  • Ferris, Stephen P.

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.

Suggested Citation

  • Arena, Matteo P. & Ferris, Stephen P., 2018. "A global analysis of corporate litigation risk and costs," International Review of Law and Economics, Elsevier, vol. 56(C), pages 28-41.
    • Handle: RePEc:eee:irlaec:v:56:y:2018:i:c:p:28-41
    DOI: 10.1016/j.irle.2018.05.003
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    Cited by:

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    6. Li, Wen & Peng, Qing, 2023. "Digital courts and corporate investment in sustainability: Evidence from China," International Review of Financial Analysis, Elsevier, vol. 88(C).

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    More about this item

    Keywords

    International corporate finance; Corporate litigation; International law;
    All these keywords.

    JEL classification:

    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • K20 - Law and Economics - - Regulation and Business Law - - - General
    • K41 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Litigation Process

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