The effects of news on initial corporate lawsuits

The Time Needed to Rebound after Firms Lost in Litigations: The Role of Information Transparency

“…Consistent with prior research, results indicate that the ACAR of firms lost in litigations are negative post the judgment announcement (Bhagat et al, 1998;Koku et al, 2001;Cutler & Summers, 1988;Hertzel & Smith, 1993;Murphy et al, 2009;Afik et al, 2014). Losing the lawsuits is undoubtedly bad news from the investors' perspectives.…”

“…This study makes an important contribution by making people notice the collateral damage caused by litigation, either directly or indirectly. Other researchers (Bhagat, Bizjak, & Coles, 1998;Koku, Qureshi, & Akhigbe, 2001;Afik, Lahav, & Ochakovski, 2014) also acquire similar conclusions under a more generalized scenario while elaborating the study on the topic of litigation from different perspectives. Bhagat et al (1998) examine the stock market reaction at two extinct points of time: litigation filing and settlement announcement.…”

“…They analyze a sample of 355 observations collected from 1981 to 1983 and find factors relating to the explanation of diversified degree of wealth loss due to litigation. Koku et al (2001) on the other hand, focus on the disparity of market reactions according to the characteristics of the lawsuits and the parties involved. Afik et al (2014) provide interesting observation in the Israel market where the market scale is relatively small compared to previous studies.…”

Secondary Stakeholders as Agents of Influence: Three Essays on Political Risk, Reputation and Multinational Performance

“…They also speculated that lawsuits filed by government agencies (e.g., environmental suits) may have more serious financial consequences for firms than other types of litigation (e.g., breach of contract). By contrast, Koku, Qureshi, & Akhigbe (2001) found that lawsuits brought by individuals against corporate defendants had no significant wealth effect, although those against other firms did. This finding led the authors to conclude that firms should settle inter-firm lawsuits while litigating non-interfirm suits.…”

“…This is not an idle threat given the sympathy American juries have shown toward individual plaintiffs in non-ATS tort cases (Koku et al, 2001) and ATS cases involving private individuals and government defendants. Indeed, in 1995 a U.S. jury awarded Filipino citizens nearly $2 billion in damages in an ATS case against the estate of former dictator Ferdinand Marcos (Latham & Watkins, 2010).…”