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Foreign firms at a disadvantage in U.S. courts?

Utpal Bhattacharya (Indiana U.), Neal Galpin (Texas A&M) and Bruce Haslem (Florida State) have a forthcoming paper in the Journal of Law and Economics entitled "The Home Court Advantage in International Corporate Litigation". Abstract:

Using a comprehensive sample of 2,361 public U.S. corporate defendants and 715 public foreign corporate defendants in U.S. federal courts in the period 1995-2000, we find that the market reaction at the announcement of a U.S. federal lawsuit is less negative for U.S. corporate defendants. We find that this market reaction is rational; U.S. firms are less likely to lose than foreign firms controlling for year, industry, type of litigation, size and profitability. This may still reflect a sample selection bias. We control for this bias, and the results remain. We thus cannot rule out that U.S. firms have a home court advantage in U.S. federal courts.

The paper is available at SSRN here. Profs. Bhattacharya, Galpin and Haslem are kind enough to cite in their introduction my account of the infamous case of O'Keefe v. Loewen, which I wrote up back in 1996 for the WSJ. The Irish financial site FinFacts also summarizes their findings.



Rafael Mangual
Project Manager,
Legal Policy

Manhattan Institute


Published by the Manhattan Institute

The Manhattan Insitute's Center for Legal Policy.