Institutional Affiliation: Northwestern University
|The Private Ordering Solution to Multiforum Shareholder Litigation|
with : w21362
This paper analyzes a private ordering solution to multiforum shareholder litigation: exclusive forum provisions in corporate charters and bylaws. We examine what drives the growth in these provisions and whether, as some critics contend, their adoption reflects managerial opportunism. We find that nearly all new Delaware corporations adopt the provision at the IPO stage, and that the transition from zero to near-universal IPO adoption over 2007-14 is driven by law firms. Characteristics of individual companies appear to play little or no role in adoption decisions. Instead, the pattern of adoption follows what can be described as a light switch model, in which law firms suddenly switch from never adopting to always adopting the provision in the IPOs they advise. For midstream adoption...
Published: Roberta Romano & Sarath Sanga, 2017. "The Private Ordering Solution to Multiforum Shareholder Litigation," Journal of Empirical Legal Studies, vol 14(1), pages 31-78.