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The Home Court Advantage in International Corporate Litigation

Author

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  • Utpal Bhattacharya
  • Neal Galpin
  • Bruce Haslem

Abstract

Using a comprehensive sample of 2,361 public U.S. corporate defendants and 715 public foreign corporate defendants in U.S. federal courts in the period 1995–2000, we find that the market reaction at the announcement of a U.S. federal lawsuit is less negative for U.S. corporate defendants than for foreign corporate defendants. We find that this market reaction is rational; U.S. firms are less likely to lose than are foreign firms when we control for year, industry, type of litigation, size, and profitability. This finding may still reflect a sample selection bias. We control for this bias, and the results remain unchanged. We thus cannot rule out that U.S. firms have a home court advantage in U.S. federal courts.

Suggested Citation

  • Utpal Bhattacharya & Neal Galpin & Bruce Haslem, 2007. "The Home Court Advantage in International Corporate Litigation," Journal of Law and Economics, University of Chicago Press, vol. 50, pages 625-660.
  • Handle: RePEc:ucp:jlawec:v:50:y:2007:p:625-660
    DOI: 10.1086/519817
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    File URL: http://dx.doi.org/10.1086/519817
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    References listed on IDEAS

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    Cited by:

    1. Turrini, Alessandro & van Ypersele, Tanguy, 2010. "Traders, courts, and the border effect puzzle," Regional Science and Urban Economics, Elsevier, vol. 40(2-3), pages 81-91, May.
    2. repec:eee:jbrese:v:76:y:2017:i:c:p:145-158 is not listed on IDEAS
    3. Peter Grajzl & Valentina Dimitrova-Grajzl & Katarina Zajc, 2016. "Inside post-socialist courts: the determinants of adjudicatory outcomes in Slovenian commercial disputes," European Journal of Law and Economics, Springer, vol. 41(1), pages 85-115, February.
    4. Samantha Bielen & Peter Grajzl & Wim Marneffe, 2017. "Understanding the Time to Court Case Resolution: A Competing Risks Analysis Using Belgian Data," CESifo Working Paper Series 6450, CESifo Group Munich.
    5. Filatotchev, Igor & Bell, R. Greg & Rasheed, Abdul A., 2016. "Globalization of Capital Markets: Implications for Firm Strategies," Journal of International Management, Elsevier, vol. 22(3), pages 211-221.
    6. Kimberlee Weatherall & Elizabeth Webster, 2014. "Patent Enforcement: A Review Of The Literature," Journal of Economic Surveys, Wiley Blackwell, vol. 28(2), pages 312-343, April.
    7. Li, Chen, 2016. "Signing a Bilateral Investment Treaty - A tradeoff between investment protection and regulation," Annual Conference 2016 (Augsburg): Demographic Change 145505, Verein für Socialpolitik / German Economic Association.
    8. Peter Grajzl & Katarina Zajc, 2017. "Litigation and the timing of settlement: evidence from commercial disputes," European Journal of Law and Economics, Springer, vol. 44(2), pages 287-319, October.
    9. Andrew Myburgh & Jordi Paniagua, 2016. "Does International Commercial Arbitration Promote Foreign Direct Investment?," Journal of Law and Economics, University of Chicago Press, vol. 59(3), pages 597-627.
    10. Haitian Lu, Hongbo Pan, Chenying Zhang, . "Political Connectedness and Court Outcomes: Evidence from Chinese Corporate Lawsuits," Journal of Law and Economics, University of Chicago Press, vol. 58(4).
    11. repec:spr:jecfin:v:41:y:2017:i:4:d:10.1007_s12197-016-9382-6 is not listed on IDEAS
    12. Aharony, Joseph & Liu, Chelsea & Yawson, Alfred, 2015. "Corporate litigation and executive turnover," Journal of Corporate Finance, Elsevier, vol. 34(C), pages 268-292.
    13. Marina Azzimonti, 2016. "Does Partisan Conflict Deter FDI Inflows to the US?," NBER Working Papers 22336, National Bureau of Economic Research, Inc.
    14. Michael Firth & Oliver M. Rui & Wenfeng Wu, 2011. "The Effects of Political Connections and State Ownership on Corporate Litigation in China," Journal of Law and Economics, University of Chicago Press, vol. 54(3), pages 573-607.
    15. Julio, Brandon & Yook, Youngsuk, 2016. "Policy uncertainty, irreversibility, and cross-border flows of capital," Journal of International Economics, Elsevier, vol. 103(C), pages 13-26.
    16. James Malm & Marcin Krolikowski, 2017. "Litigation risk and financial leverage," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 41(1), pages 180-194, January.

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