Litigation Data as a Predictor of Financial Returns
Last week saw the conclusion of Apple and Qualcomm’s much talked about royalties and patent lawsuit. While Qualcomm observed a 23% stock price surge following the lawsuit win, Apple, interestingly, managed to observe a stable stock price despite their loss. In this Intelligence piece, we summarize a 2018 academic paper that investigates the relationship between litigation and stock returns. Specifically, the paper examines whether portfolios consisting of public companies involved in lawsuits could observe positive returns, despite its negative perception.