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Surprise! Most Blockbuster Jury Awards Are Ignored By The Stock Market



Utilizing a master list produced by Viscusi (2004) of what he called blockbuster jury awardsthose amounting to $100 million or more,we selected 17 cases where the defendant had traded shares (we excluded the tobacco cases) to see the stock market reaction to these announced awards. Utilizing event study methodologies similar to those used by Prince and Rubin (2002), and looking at both case filing and award date data, we generally found trivial stock market effects for 11 of the 17 companies, despite the size of the awards. In those cases where there was a stock market response, it occurred with firms whose total award to market capitalization ratio was in excess of 9%. Apparently the awards, which on their face value seem large, are not always that important when one considers the much larger market capitalization and the fact that these very large, prominent defendant firms are under almost constant litigation, with the blockbuster being only one of many cases facing the firm.

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