Corporate Litigation in Specialized Business Courts

Abstract

Plaintiffs’ lawyer fees and monetary awards have a distorting effect on shareholder value effects in US derivative cases. In this chapter we analyze the benefits of corporate litigation without these externalities using a data set for the Netherlands between 2002 and 2013. We find significant abnormal returns within a short timespan surrounding the filing and resolution of M&A-related lawsuits. Over longer horizons, resolutions have little impact on shareholder value. However, our findings suggest that longer waiting times for court resolutions are costly. The evidence from the Netherlands supports the view that in settings without strong distortions derivative style litigation may be important.