Frequency Of Lawsuits Research Articles

Is Blockholder Diversity Detrimental?

We find that, overall, blockholder diversity, i.e., the firm shareholder base including several different types of blocks, is detrimental to firm performance. We show that lagged disclosure, on exogenous predetermined dates, that reveals an increase in block diversity is followed by a negative market reaction. Firms held by heterogeneous blockholders consistently perform worse than firms held by homogeneous blockholders. Block diversity is particularly detrimental when uncertainty is high. Disagreement among shareholders (e.g., as reflected in the frequency of lawsuits being filed) increases when the blockholder base is diverse. We make our blockholder data set public for the benefit of other researchers. This paper was accepted by Victoria Ivashina, finance. Funding: This work was supported by the Israel Science Foundation [Grant 264/20], the Faculty of Business and Economics, University of Melbourne [Grant ECR00009FNL], and the Accounting and Finance Association of Australia and New Zealand [Grant 2020-033]. Supplemental Material: The online appendices and data files are available at https://doi.org/10.1287/mnsc.2023.00528 .

A theory of pre-filing settlement and patent assertion entities

An informed (prospective) plaintiff can send a take-it-or-leave-it demand to an uninformed (prospective) defendant with the threat of a lawsuit that may not be credible. In this context, the well-known perfect separating equilibrium in litigation bargaining game (Reinganum and Wilde, 1986) no longer exists, and all perfect Bayesian equilibria with pre-filing settlements exhibit a cutoff feature. These equilibria offer an explanation for the distinctive behaviors of Litigation PAEs, who aggressively file lawsuits for settlements, and Portfolio PAEs, who obtain licensing revenues through pre-filing settlements. Our comparative statics results lead to testable hypotheses regarding how litigation costs and the plaintiff’s reputation affect the settlement amount before and after the cases are filed, and the frequency of lawsuits from a given plaintiff.

A Theory of Pre-Litigation Settlement and Patent Assertion Entities

An informed (prospective) plaintiff can send a take-it-or-leave-it demand to an uninformed (prospective) defendant with the threat of a lawsuit that may not be credible. In this context, the well-known perfect sepa- rating equilibrium in litigation bargaining game (Reinganum and Wilde, 1986) no longer exists, and all perfect Bayesian equilibria with pre-filing settlements exhibit a cutoff feature. These equilibria offer an explanation for the distinctive behaviors of Litigation PAEs, who aggressively file lawsuits for settlements, and Portfolio PAEs, who obtain licensing revenues through pre-filing settlements. Our comparative statics results lead to testable hypotheses regarding how litigation costs and the plaintiff’s reputation affect the settlement amount before and after the cases are filed, and the frequency of lawsuits from a given plaintiff.

The Pricing Effects of Securities Class Action Lawsuits and Litigation Insurance

The price reactions to corrective disclosures often serve as a benchmark for settlements in securities class action lawsuits. When the firm bears litigation costs, this benchmark creates a feedback effect that exacerbates the price reaction to news that contradicts managers’ earlier reports. Litigation insurance provides value in this setting by reducing the need for investors to price the effects of anticipated litigation. Insurance also affects how changes in the litigation environment impact the firm, with some changes having opposite effects on the frequency of lawsuits against uninsured and insured firms. The pricing behavior of rational investors eliminates the valuation impact of the portion of settlements paid to the investors, similar to dividends. The valuation impact of litigation arises from transaction costs, such as attorney fees, which the firm can mitigate by constraining misreporting and by purchasing insurance. (JEL G14, G30, K22, M41).

The Pricing Effects of Securities Class Action Lawsuits and Litigation Insurance

The price reactions to corrective disclosures often serve as a benchmark for settlements in securities class action lawsuits. When the firm bears litigation costs, this benchmark creates a feedback effect that exacerbates the price reaction to news that contradicts managers' earlier reports. Litigation insurance provides value in this setting by reducing the need for investors to price the effects of anticipated litigation. Insurance also affects how changes in the litigation environment impact the firm, with some changes having opposite effects on the frequency of lawsuits against uninsured and insured firms. The pricing behavior of rational investors eliminates the valuation impact of the portion of settlements paid to investors, similar to dividends. The valuation impact of litigation arises from transaction costs, such as attorney fees, that the firm can mitigate by constraining misreporting and by purchasing insurance.

Does Austrian Tax Law Encourage Lawsuits? An Empirical Analysis of the Tax Jurisdiction of the Austrian Supreme Administrative Court with Respect to Tax Rate, Tax Base, and Time Effects

This paper analyzes the tax jurisdiction of the Austrian Supreme Administrative Court (VwGH) with respect to tax rate, tax base, and time effects. Tax base effects are the most frequent tax effects with almost 80% of all VwGH rulings. Although time effects predominate in the academic business tax literature, their proportion of VwGH decisions is only 14%. With a proportion of 6% of all decisions, tax rate effects affect tax jurisdiction only marginally. If the frequency of lawsuits is used as a proxy for tax compliance costs, the tax law could be simplified by more detailed tax laws that are less vulnerable to different interpretations. Due to the difficult separation of income and consumption in any tax system, it is not possible to avoid tax lawsuits completely.

Risk Management Principles of Transportation Facility Design Engineering

Accidents continue to occur on our transportation facilities. People injured in these accidents continue to file lawsuits against transportation agencies, in part because the language used in published standards for design and maintenance contain deficiencies. Risk management is the organized approach to preventing or reducing lawsuits. Past risk management research has focused almost exclusively on identifying the physical characteristics of a road that are most often the subject of lawsuits. No attention has been given to the question of whether the language of design standards influences the frequency of lawsuits. This author suggests that written design standards be reviewed and possibly redrafted to reduce the frequency of lawsuits. Language in design standards that is clear, objective, quantifiable, reasonable, and qualified will best serve this goal. When engineers choose to deviate from published standards, a written explanation for the deviation should be prepared.