The Costs of Conflict Resolution and Financial Distress: Evidence from the Texaco-Pennzoil Litigation
AbstractThis 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.
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Bibliographic InfoArticle provided by The RAND Corporation in its journal RAND Journal of Economics.
Volume (Year): 19 (1988)
Issue (Month): 2 (Summer)
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Web page: http://www.rje.org
Other versions of this item:
- David M. Cutler & Lawrence H. Summers, 1987. "The Costs of Conflict Resolution and Financial Distress: Evidence from the Texaco-Pennzoil Litigation," NBER Working Papers 2418, National Bureau of Economic Research, Inc.
- Summers, Lawrence H. & Cutler, David, 1988. "The Costs of Conflict Resolution and Financial Distress: Evidence from the Texaco-Pennzoil Litigation," Scholarly Articles 2689179, Harvard University Department of Economics.
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