THE COSTS OF INEFFICIENT BARGAINING AND FINANCIAL DISTRESS - EVIDENCE FROM CORPORATE LAWSUITS

• 成果类型: Article
• 署名作者: BHAGAT, S; BRICKLEY, JA; COLES, JL
• 署名单位: University of Rochester; University of Colorado System; University of Colorado Boulder; Utah System of Higher Education; University of Utah
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/0304-405X(94)90005-1
• 发表日期: 1994
• 页码: 221-247
• 关键词: LAWSUITS; Financial distress; bargaining

摘要

This study provides the first large-sample analysis of the stock-market reactions to interfirm litigation. When a suit is filed, the common stock of the typical defendant declines by about 1%, while the plaintiff experiences no significant gains. For the average pair of firms, the combined drop in value upon filing is $21 million. Much of the loss is regained if the suit is settled. The findings suggest that bargaining among firm claimants sometimes leads to very inefficient outcomes. Part of the leakage is explained by the costs of increased financial distress imposed on the defendant.