Management and market reactions to litigation: do shareholders win when the company loses?

Deskripsi

Litigation against companies has existed as long as businesses have competed. Regardless of who the plaintiffs are and whether or not the actions stem from civil or criminal law, markets adjust a company's stock price for the effect of litigation on company profitability. Indeed, numerous studies conclude that the filing of a lawsuit against a company is always accompanied by a negative reaction from stock markets. To most executives, the idea that litigation is bad for business and that settling is better than going to trial may seem like common sense. However, research finds that companies that settle litigation actually tend to be punished by stock markets.Printed Journal