Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/142253
Authors: 
Colonnello, Stefano
Herpfer, Christoph
Year of Publication: 
2016
Series/Report no.: 
IWH Discussion Papers 1/2016
Abstract: 
We estimate the link between the court system and firm value by exploiting a U.S. Supreme Court ruling which changed firms' exposure to different courts. We find that exposure to courts which are highly ranked by the U.S. Chamber of Commerce increases firm value. The effect is driven by courts' attitude towards businesses more than by their efficiency and is more pronounced for firms in industries with high litigation risk. We also test whether firms benefit from the ability to steer lawsuits into friendly courts, so-called forum shopping. We provide evidence that a reduction in firms' ability to forum shop decreases firm value, whereas a reduction in plaintiffs' ability to forum shop increases firm value.
Subjects: 
courts
forum shopping
circuit splits
governance
JEL: 
G32
G34
G38
K40
Document Type: 
Working Paper

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