Does bilateral investment treaty arbitration have any value for multinational corporations?
Brada, Josef C.; Chen, Chunda; Jia, Jingyi; Kutan, Ali M. (22.04.2020)
Numero
10/2020Julkaisija
Bank of Finland
2020
Julkaisun pysyvä osoite on
https://urn.fi/URN:NBN:fi:bof-202004232089Tiivistelmä
Using event study methodology, we investigate whether bilateral investment protection treaties afford protection to foreign investors. Examining arbitral decisions for firms from six countries shows that firms that received awards from arbitrators gained in market value by as much as 3%. Per dollar awarded, firms gained over $20 in market value. Thus, we conclude that the system of arbitration does afford significant benefits to firms that can demonstrate that they have been injured by host governments who violated the terms of the relevant investor protection treaty. We also find some evidence that arbitral decisions are anticipated by stock markets.
Sisällysluettelo
Abstract .. 4
1 Introduction .. 5
2 Background and literature survey .. 7
A Bilateral investment treaties and the arbitration of disputes .. 7
B Effects of bilateral investment treaties on FDI .. 8
C Litigation and the value of the firm .. 9
3 Data and methodology .. 12
A Data .. 12
B Methodology .. 15
4 Results .. 17
A Excess returns from arbitral decisions .. 17
B Arbitral awards and firm value .. 21
C Does the market anticipate arbitral decisions prior to the announcement date? .. 22
5 Conclusions .. 23
References .. 25
Appendix .. 27
1 Introduction .. 5
2 Background and literature survey .. 7
A Bilateral investment treaties and the arbitration of disputes .. 7
B Effects of bilateral investment treaties on FDI .. 8
C Litigation and the value of the firm .. 9
3 Data and methodology .. 12
A Data .. 12
B Methodology .. 15
4 Results .. 17
A Excess returns from arbitral decisions .. 17
B Arbitral awards and firm value .. 21
C Does the market anticipate arbitral decisions prior to the announcement date? .. 22
5 Conclusions .. 23
References .. 25
Appendix .. 27