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The Impact of Antitrust Litigation on Shareholder Return

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  • Huth, William L
  • MacDonald, Don N

Abstract

The hypothesis that antitrust litigation will redistribute economic power is examined using an event study framework. District and appellate court findings involving firms litigating antitrust issues and the Telex v. IBM case are examined. The results indicated that shareholders of firms involved in the litigation experienced decreases (increases) in return when either court finding was unfavorable (favorable). The Telex v. IBM results indicated that the district court's finding against IBM resulted in significant positive abnormal returns for computer industry firms. Abnormal negative returns were also found in the period surrounding the appellate court reversal. Copyright 1989 by Blackwell Publishing Ltd.

Suggested Citation

  • Huth, William L & MacDonald, Don N, 1989. "The Impact of Antitrust Litigation on Shareholder Return," Journal of Industrial Economics, Wiley Blackwell, vol. 37(4), pages 411-426, June.
    • Handle: RePEc:bla:jindec:v:37:y:1989:i:4:p:411-26
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    Cited by:

    1. Daniel Martin Katz & Michael J Bommarito II & Tyler Soellinger & James Ming Chen, 2015. "Law on the Market? Abnormal Stock Returns and Supreme Court Decision-Making," Papers 1508.05751, arXiv.org, revised May 2017.
    2. Davis, Yehuda & Govindaraj, Suresh & Suslava, Kate, 2024. "Does the stock market anticipate events and supreme court decisions in corporate cases?," Global Finance Journal, Elsevier, vol. 60(C).
    3. Michael Cichello & Douglas Lamdin, 2006. "Event Studies and the Analysis of Antitrust," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 13(2), pages 229-245.
    4. Detre, Joshua D. & Golub, Alla A., 2004. "A Reexamination Of The Profitability Of Price Fixing Using Stock Price Movement: Has New Antitrust Legislation Been A More Effective Deterrent Of Price Fixing?," Staff Papers 28668, Purdue University, Department of Agricultural Economics.
    5. Svetlana B. Avdasheva & Dina V. Tsytsulina, 2014. "The Effects Of Competition Policy: Merger Approval, Entry Barrier Removal, Antitrust Enforcement Compared," HSE Working papers WP BRP 34/FE/2014, National Research University Higher School of Economics.

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