Business Courts and Firm Performance Ch 3

Appendix B Table B1—Variable Definitions Variable Definition Compustat Codes Age Year of firm-year observation minus earliest year for which Compustat data are available for that firm Assets Total Assets at Book leverage Total debt over assets (dlc+dltt)/at Dividends Dividends on common stock dvc Financial leverage Total debt over (sum of total debt and market value) (dlc+dltt)/((dlc+dltt+ (prcc f*csho)) Market value Number of common shares outstanding times closing price at end of fiscal year prcc f*csho Return on assets /(operating income before depreciation minus (depreciation and amortization)) over lagged assets (oibdp-dp)/L.at Return on equity operating income before tion/common equity oibdp/ceq deprecia- Sales Net sales sale Tangibility (property, plant, and equipment) over assets ppentat Tobin’s q (Assets minus common equity plus market value) over assets (at-ceq+(prcc f * csho))/at) Total debt Sum of debt in current liabilities and long term debt dlc+dltt Table B2—Controls Takeover statutes To control for the enactment of takeover statutes, I create a separate variable for each type of takeover statute mentioned in table 2 of Cain, McKeon and Solomon (2017). The relevant variables take on the value 1 in the year that the relevant takeover statute is adopted and ”switch” back to zero in the year (if any) that the state repeals the relevant legislation. In the years before the statute’s enactment (or, if is repealed, in the years after its repeal including the year of the repeal), the variable takes on the value zero. Takeover cases Cain, McKeon and Solomon (2017) distinguish between takeover law changes brought about by statute and takeover law changes made by case law. To the extent that I control for takeover cases, I again rely on table 2 of (Cain, McKeon and Solomon, 2017) and proceed as with statutes (see above), but use variables that focus on takeover law changes via case law. Complex litigation programs To control for the creation of complex litigation programs I use a variable that takes on the value 1 in the year that a state of incorporation creates a complex litigation program (table 1) and all subsequent years during which that program is maintained whereas it takes on the value 0 in all years prior to the creation of a complex commercial litigation program as well as in all years after the year in which that program has been terminated. Table C1—Business Courts and Tobin’s q: Regular Cohort Approach (1990-2015) Dependent Variable: Log(Tobin’s q) (1) (2) (3) (4) Winsorized at Business Court Complex Litigation Business Comb. Statute Mandatory Staggered Board Constituency Statute Pro Poison Pill Statute Strong Pro Pois. Pill Stat. Pro Poison Pill Case Strong Pro Pois. Pill Case Unocal Unocal Rejected Revlon Revlon Rejected Blasius Blasius Rejected (5) (6) Trimmed at 1 & 99% 2 & 98% 5 & 95% 1 & 99% 2 & 98% 5 & 95% 0.053∗∗∗ (0.019) -0.014 (0.025) 0.003 (0.017) -0.048 (0.037) -0.025 (0.022) -0.014 (0.042) -0.111∗ (0.059) 0.085∗ (0.049) -0.079 (0.052) 0.030 (0.060) -0.024 (0.035) -0.025 (0.024) 0.019 (0.017) 0.119∗∗ (0.049) 0.135∗∗∗ (0.028) 0.052∗∗∗ (0.018) -0.007 (0.024) -0.000 (0.017) -0.049 (0.037) -0.022 (0.020) -0.010 (0.040) -0.109∗ (0.060) 0.075 (0.048) -0.064 (0.049) 0.030 (0.057) -0.021 (0.033) -0.024 (0.023) 0.016 (0.017) 0.120∗∗ (0.047) 0.121∗∗∗ (0.025) 0.046∗∗∗ (0.015) 0.001 (0.022) -0.006 (0.018) -0.044 (0.033) -0.018 (0.018) -0.008 (0.037) -0.072 (0.063) 0.041 (0.043) -0.023 (0.041) 0.037 (0.050) -0.004 (0.032) -0.027 (0.021) 0.005 (0.019) 0.101∗∗ (0.045) 0.084∗∗∗ (0.020) 0.052∗∗∗ (0.018) 0.003 (0.025) -0.031∗ (0.018) -0.038 (0.035) -0.014 (0.020) -0.004 (0.039) -0.094 (0.063) 0.065 (0.047) -0.035 (0.042) 0.035 (0.052) -0.015 (0.036) -0.029 (0.024) 0.004 (0.018) 0.124∗∗∗ (0.044) 0.096∗∗∗ (0.022) 0.051∗∗∗ (0.017) 0.003 (0.025) -0.021 (0.028) -0.045 (0.034) -0.016 (0.019) 0.001 (0.037) -0.088 (0.067) 0.054 (0.043) -0.023 (0.038) 0.039 (0.048) -0.011 (0.037) -0.024 (0.024) 0.001 (0.019) 0.115∗∗ (0.047) 0.085∗∗∗ (0.021) 0.043∗∗∗ (0.013) -0.011 (0.028) -0.016 (0.021) -0.010 (0.025) -0.006 (0.015) -0.027 (0.032) 0.010 (0.067) 0.031 (0.044) 0.005 (0.040) 0.043 (0.042) 0.024 (0.040) -0.034 (0.024) -0.029 (0.027) 0.055 (0.042) 0.029 (0.036) N 59747 59747 59747 59023 58166 55171 R2 0.057 0.059 0.064 0.059 0.062 0.068 adj. R2 0.0370 0.0396 0.0450 0.0393 0.0422 0.0471 Note: Regular cohort approach. Years 1990-2015. Variables/controls are defined in tables B.1 and B.2. All regressions cluster at the level of the state of incorporation. To be included, firms must have at least one firm-year observation in 1990 or earlier. Firms that reincorporated between 1990 and 2015 were dropped. * ** *** denote significance at the 10%, 5%, and 1% levels respectively. Table C2—Business Courts and Tobin’s q: Regular Cohort Approach (1994-2015) Dependent Variable: Log(Tobin’s q) (1) (2) 0.060∗∗ (0.028) 0.043 (0.044) 0.056∗∗ (0.028) 0.040 (0.044) -0.004 (0.010) -0.072∗∗∗ (0.018) -0.015 (0.023) 0.010 (0.019) -0.008 (0.036) (3) (4) (5) (6) 0.051∗∗ 0.055∗∗∗ 0.053∗∗∗ 0.046∗∗ (0.025) (0.017) (0.018) (0.020) Complex Litigation Program 0.039 0.012 0.010 0.010 (0.052) (0.017) (0.018) (0.026) Business Combination Statute 0.000 -0.047∗∗∗ -0.034∗∗ (0.010) (0.011) (0.015) Mandatory Staggered Board -0.065∗∗ -0.075∗∗∗ -0.058∗ (0.028) (0.022) (0.034) Constituency Statute -0.019 -0.017 -0.018 (0.024) (0.021) (0.021) Pro Poison Pill Statute 0.004 0.051 0.035 (0.021) (0.033) (0.026) Strong Pro Poison Pill Statute -0.043 -0.094∗ -0.156∗∗∗ (0.038) (0.048) (0.050) Pro Poison Pill Case 0.082 0.025 (0.050) (0.043) Strong Pro Poison Pill Case -0.091∗∗ -0.010 (0.039) (0.039) Unocal -0.014 0.008 (0.055) (0.053) Unocal Rejected -0.077 -0.061 (0.056) (0.041) Revlon 0.004 -0.002 (0.026) (0.022) Revlon Rejected 0.031 0.019 (0.023) (0.017) Blasius 0.046∗ 0.120∗∗∗ (0.025) (0.040) Blasius Rejected 0.088∗∗ 0.094∗∗∗ (0.043) (0.026) N 43191 43191 43191 43191 43191 43191 R2 0.037 0.038 0.038 0.068 0.068 0.069 adj. R2 0.0370 0.0370 0.0376 0.0457 0.0459 0.0465 Note: Regular cohort approach. Years 1994-2015. Variables/controls are defined in tables B.1 and B.2. All regressions cluster at the level of the state of incorporation. To be included, firms must have at least one firm-year observation before 1992 or earlier. Firms that reincorporated between 1990 and 2015 were dropped. * ** *** denote significance at the 10%, 5%, and 1% levels respectively. Business Court Table C3—Business Courts and Tobin’s q: Regular Cohort Approach (1990-2015): Including Reincorporating Firms Dependent Variable: Log(Tobin’s q) Business Court Complex Litigation Program Business Combination Statute Mandatory Staggered Board Constituency Statute Pro Poison Pill Statute Strong Pro Poison Pill Statute Pro Poison Pill Case Strong Pro Poison Pill Case Unocal Unocal Rejected Revlon Revlon Rejected Blasius Blasius Rejected (1) (2) (3) (4) (5) (6) 0.027 (0.019) 0.052 (0.037) 0.037∗ (0.020) 0.044 (0.034) -0.056∗ (0.032) 0.089∗∗ (0.034) -0.001 (0.027) -0.003 (0.032) 0.084 (0.055) 0.041∗∗ (0.020) 0.048 (0.038) -0.016 (0.020) 0.118∗∗∗ (0.043) -0.004 (0.027) -0.019 (0.034) 0.118∗ (0.060) -0.053∗ (0.031) 0.040 (0.043) 0.071∗ (0.038) -0.002 (0.041) -0.017 (0.023) 0.032 (0.034) -0.035 (0.028) 0.017 (0.031) 65791 0.035 0.0346 0.013 (0.017) 0.013 (0.029) 0.033∗∗ (0.016) 0.003 (0.028) -0.068∗∗ (0.030) 0.077∗∗ (0.036) 0.005 (0.021) 0.020 (0.031) 0.016 (0.069) 0.033∗∗ (0.014) -0.001 (0.033) -0.032∗ (0.018) 0.113∗∗ (0.056) 0.006 (0.021) 0.004 (0.037) 0.040 (0.078) -0.083∗ (0.042) 0.097∗ (0.051) 0.109∗∗ (0.042) 0.023 (0.038) -0.008 (0.029) 0.025 (0.034) -0.008 (0.044) 0.014 (0.031) 65791 0.061 0.0431 N 65791 65791 65791 65791 R2 0.034 0.034 0.059 0.060 adj. R2 0.0333 0.0338 0.0419 0.0424 Fixed Effects: Firm FE Yes Yes Yes Yes Yes Yes Year FE Yes Yes Yes No No No HQ state-year FE No No No Yes Yes Yes Note: Regular cohort approach. Dependent variable is log(Tobin’s q). Variables/controls are defined in tables B.1 and B.2. All regressions cluster at the level headquarters state. To be included, firms must have at least one firm-year observation before 1992. Firms that reincorporated between 1990 and 2015 are included in the regressions. * ** *** denote significance at the 10%, 5%, and 1% levels respectively. Table C4—Regular Cohort Approach (1990-2015): Dropping Individual States of Incorporation Dependent Variable: Log(Tobin’s q) State Dropped AL AK AZ AR CA CO CT DE Business Court 0.068∗∗∗ (0.014) -0.003 (0.018) 0.068∗∗∗ (0.014) -0.003 (0.018) 0.069∗∗∗ (0.014) -0.018 (0.012) 0.068∗∗∗ (0.014) -0.003 (0.018) 0.069∗∗∗ (0.014) -0.002 (0.066) 0.073∗∗∗ (0.015) -0.002 (0.018) 0.069∗∗∗ (0.014) 0.004 (0.020) 0.066∗∗ (0.031) -0.034 (0.062) 58122 0.062 0.0418 58140 0.062 0.0420 58026 0.062 0.0416 58122 0.062 0.0418 56285 0.063 0.0424 57273 0.062 0.0420 57940 0.062 0.0416 25503 0.087 0.0451 Complex Litigation N R2 adj. R2 State Dropped DC FL GA HI ID IL IN IA Business Court 0.068∗∗∗ (0.014) -0.003 (0.018) 0.065∗∗∗ (0.015) -0.004 (0.018) 0.064∗∗∗ (0.014) -0.004 (0.018) 0.068∗∗∗ (0.014) -0.003 (0.018) 0.068∗∗∗ (0.014) -0.003 (0.018) 0.071∗∗∗ (0.014) -0.003 (0.018) 0.069∗∗∗ (0.014) -0.003 (0.018) 0.068∗∗∗ (0.015) -0.003 (0.018) 58156 0.062 0.0417 56822 0.063 0.0424 57406 0.062 0.0418 58132 0.062 0.0418 58163 0.062 0.0417 57901 0.062 0.0418 57572 0.062 0.0414 57970 0.062 0.0417 Complex Litigation N R2 adj. R2 State Dropped KS KY LA ME MD MA MI MN Business Court 0.068∗∗∗ (0.014) -0.003 (0.018) 0.068∗∗∗ (0.014) -0.003 (0.018) 0.068∗∗∗ (0.014) -0.003 (0.018) 0.068∗∗∗ (0.014) -0.003 (0.018) 0.068∗∗∗ (0.015) -0.001 (0.019) 0.074∗∗∗ (0.015) -0.004 (0.018) 0.067∗∗∗ (0.015) -0.003 (0.018) 0.068∗∗∗ (0.015) 0.010 (0.023) 58012 0.062 0.0417 58063 0.061 0.0415 58015 0.062 0.0418 58128 0.062 0.0418 57579 0.062 0.0419 56711 0.062 0.0413 57458 0.062 0.0414 56288 0.061 0.0402 Complex Litigation N R2 adj. R2 State Dropped MS MO MT NE NV NH NJ NM Business Court 0.068∗∗∗ (0.014) -0.003 (0.018) 0.069∗∗∗ (0.014) -0.003 (0.018) 0.068∗∗∗ (0.014) -0.003 (0.018) 0.068∗∗∗ (0.014) -0.003 (0.018) 0.063∗∗∗ (0.016) -0.002 (0.017) 0.068∗∗∗ (0.014) -0.003 (0.018) 0.058∗∗∗ (0.012) -0.002 (0.018) 0.069∗∗∗ (0.014) -0.001 (0.018) 58111 0.062 0.0419 57839 0.062 0.0416 58123 0.061 0.0413 58083 0.062 0.0418 56695 0.064 0.0435 58164 0.062 0.0417 56913 0.063 0.0422 58101 0.062 0.0419 Complex Litigation N R2 adj. R2 State Dropped NY ND NC OH OK OR PA RI Business Court 0.076∗∗∗ (0.015) 0.001 (0.019) 0.068∗∗∗ (0.014) -0.003 (0.018) 0.070∗∗∗ (0.015) -0.004 (0.018) 0.073∗∗∗ (0.015) -0.003 (0.018) 0.068∗∗∗ (0.014) -0.003 (0.018) 0.068∗∗∗ (0.014) -0.010 (0.018) 0.072∗∗∗ (0.015) -0.001 (0.018) 0.068∗∗∗ (0.015) -0.003 (0.018) 55181 0.063 0.0418 58166 0.062 0.0417 57746 0.062 0.0415 56630 0.062 0.0411 57928 0.062 0.0416 57848 0.062 0.0418 56741 0.062 0.0417 58061 0.061 0.0415 Complex Litigation N R2 adj. R2 State Dropped SC SD TN TX UT VT VA WA Business Court 0.070∗∗∗ (0.014) -0.004 (0.018) 0.068∗∗∗ (0.014) -0.003 (0.018) 0.068∗∗∗ (0.014) -0.003 (0.018) 0.068∗∗∗ (0.014) -0.003 (0.018) 0.069∗∗∗ (0.014) -0.005 (0.018) 0.068∗∗∗ (0.014) -0.003 (0.018) 0.070∗∗∗ (0.014) -0.003 (0.018) 0.067∗∗∗ (0.014) -0.003 (0.018) 57987 0.062 0.0418 58140 0.061 0.0413 57806 0.061 0.0413 56987 0.061 0.0412 57670 0.062 0.0424 58151 0.062 0.0418 57266 0.062 0.0417 57753 0.061 0.0415 Complex Litigation N R2 adj. R2 State Dropped WY WV WI Business Court 0.068∗∗∗ (0.014) -0.003 (0.018) 0.068∗∗∗ (0.014) -0.003 (0.018) 0.068∗∗∗ (0.014) -0.003 (0.018) 58092 0.062 0.0418 58165 0.062 0.0417 58166 0.062 0.0417 Complex Litigation N R2 adj. R2 Note: Regular cohort approach (1990-2015). Dependent variable is log(Tobin’s q). Table shows how results vary if firm-year observations from individual states are dropped. Variables/controls are defined in tables B.1 and B.2. All regressions control for complex litigation programs, headquarters state year fixed effects as well as firm fixed effects. All regressions cluster at the level of the state of incorporation. To be included, firms must have at least one firm-year observation before 1992. Firms that reincorporated between 1990 and 2015 were dropped. * ** *** denote significance at the 10%, 5%, and 1% levels respectively. Table C5—Business Courts and Tobin’s q: Dropping Firms Headquartered in Geographical Regions Dependent Variable: log(Tobin’s q) Business Court Complex Litigation Program N R2 adj. R2 Dropping firms headquartered in Census Region: (1) b/se (2) b/se (3) b/se (4) b/se 0.090∗∗∗ (0.020) 0.003 (0.022) 42156 0.065 0.0427 0.070∗∗∗ (0.017) 0.016 (0.022) 46912 0.057 0.0375 0.051∗∗∗ (0.017) -0.024 (0.016) 40543 0.061 0.0422 0.068∗∗∗ (0.014) -0.003 (0.018) 58166 0.062 0.0417 Northeast Midwest South West Controlling for HQ state-year FE Yes Yes Yes Yes Firm FE Yes Yes Yes Yes Note: Regular cohort approach. Years 1990-2015. Dependent variable is log (Tobin’s q). U.S. Census definitions are used for regions. Other variables/controls are defined in tables B.1 and B.2. All regressions cluster at the level of the state of incorporation. To be included, firms must have at least one firm-year observation before 1994. Firms that reincorporated between 1994 and 2015 were dropped. Column 1 drops firms headquartered in the Northeast, column 2 drops firms headquartered in the Midwest, column 3 drops firms headquartered in the South, and column 4 drops firms headquartered in the West. * ** *** denote significance at the 10%, 5%, and 1% levels respectively. Table C6—Regular Cohort Approach (1990-2015): Firms Incorporated Locally or in Delaware Dependent Variable: Log(Tobin’s q) Business Court Complex Litigation Program Business Combination Statute Mandatory Staggered Board Constituency Statute Pro Poison Pill Statute Strong Pro Poison Pill Statute Pro Poison Pill Case Strong Pro Poison Pill Case Unocal Unocal Rejected Revlon Revlon Rejected Blasius Blasius Rejected (1) (2) (3) (4) (5) (6) 0.051∗∗ (0.021) 0.047 (0.053) 0.046∗∗ (0.020) 0.045 (0.052) -0.016 (0.013) -0.073∗∗∗ (0.025) -0.020 (0.030) -0.030 (0.035) 0.013 (0.049) 0.043∗∗ (0.018) 0.058 (0.065) -0.017 (0.014) -0.061∗∗ (0.028) -0.022 (0.030) -0.025 (0.041) 0.010 (0.044) 0.120∗∗ (0.058) -0.090∗ (0.052) -0.005 (0.038) -0.054 (0.051) -0.031 (0.030) -0.016 (0.042) -0.031 (0.036) 0.102∗ (0.051) 50778 0.037 0.0360 0.055∗∗∗ (0.015) -0.014 (0.018) 0.050∗∗∗ (0.016) -0.013 (0.018) -0.066∗∗∗ (0.009) -0.084∗∗∗ (0.022) -0.022 (0.015) 0.044∗ (0.022) -0.133∗∗∗ (0.016) 0.041∗∗∗ (0.015) -0.005 (0.023) -0.064∗∗∗ (0.008) -0.057∗∗ (0.023) -0.023 (0.016) 0.030∗ (0.016) -0.197∗∗∗ (0.036) 0.064∗∗ (0.025) 0.011 (0.028) 0.019 (0.016) -0.051∗∗ (0.022) -0.026 (0.016) -0.040∗∗ (0.019) 0.101∗ (0.054) 0.113∗∗∗ (0.025) 50778 0.067 0.0442 N 50778 50778 50778 50778 R2 0.036 0.036 0.066 0.066 adj. R2 0.0356 0.0357 0.0436 0.0439 Fixed Effects: Firm FE Yes Yes Yes Yes Yes Yes Year FE Yes Yes Yes No No No HQ state-year FE No No No Yes Yes Yes Note: Regular cohort approach. Years 1990-2015. Dependent variable is log(Tobin’s q). Regressions are restricted to firms that are incorporated either locally or in Delaware. Variables/controls are defined in tables B.1 and B.2. All regressions cluster at the level of the state of incorporation. To be included, firms must have at least one firm-year observation before 1992. Firms that reincorporated between 1990 and 2015 were dropped. * ** *** denote significance at the 10%, 5%, and 1% levels respectively. Table C7—Business Courts and Firm Performance: Stacked Cohort Approach (7 year window) Dependent Variable: Log(Tobin’s q) Business Court Complex Litigation Business Combination Statute Mandatory Staggered Board Constituency Statute Pro Poison Pill Statute Strong Pro Poison Pill Statute Pro Poison Pill Case Strong Pro Poison Pill Case Unocal Unocal Rejected Revlon Revlon Rejected Blasius Blasius Rejected (1) b/se (2) b/se (3) b/se (4) b/se (5) b/se (6) b/se 0.032∗∗ (0.016) 0.089∗∗ (0.041) 0.031∗ (0.016) 0.087∗∗ (0.041) -0.001 (0.026) -0.042∗∗∗ (0.008) -0.028 (0.017) -0.008 (0.026) -0.003 (0.026) 0.027∗ (0.016) 0.092∗∗ (0.044) -0.002 (0.027) -0.042∗∗∗ (0.008) -0.029 (0.017) -0.010 (0.025) -0.065∗∗∗ (0.023) 0.068∗∗∗ (0.021) -0.083∗∗∗ (0.018) 0.035 (0.030) 0.021 (0.016) -0.058∗∗∗ (0.017) -0.051∗∗∗ (0.013) 0.024 (0.021) 0.080∗∗∗ (0.016) 278813 0.0594 0.0589 0.036∗∗ (0.016) 0.044∗ (0.022) 0.036∗∗ (0.016) 0.044∗ (0.022) -0.002 (0.025) 0.007 (0.038) -0.003 (0.016) -0.012 (0.036) -0.025 (0.025) 0.036∗∗ (0.017) 0.048∗∗ (0.021) -0.004 (0.024) 0.007 (0.038) -0.002 (0.016) -0.022 (0.037) -0.056∗ (0.030) 0.015 (0.027) 0.005 (0.024) 0.099 (0.068) 0.013 (0.019) -0.037 (0.043) -0.036 (0.032) 0.051 (0.039) 0.045∗∗ (0.022) 278813 0.0894 0.0850 N 278813 278813 278813 278813 R2 0.0591 0.0592 0.0892 0.0893 adj. R2 0.0587 0.0587 0.0849 0.0849 Fixed Effects: ES-Firm FE Yes Yes Yes Yes Yes Yes ES-Year FE Yes Yes Yes Yes Yes Yes HQ state-year FE No No No Yes Yes Yes Note: Stacked cohort approach. Event sample spans 3 years on either side of the treatment year. Dependent variable is log(Tobin’s q). Variables/controls are defined in tables B.1 and B.2. All regressions cluster at the level of state of incorporation. ES-Firm FE stands for event-sample firm fixed effects. ESYear FE stands for event-sample year fixed effects. To be included, firms must have at least one firm-year observation before 1992. Firms that reincorporated between 1994 and 2015 were dropped. The baseline mean denotes the mean Tobin’s q of firms incorporated in treatment states in the years before the treatment. * ** *** denote significance at the 10%, 5%, and 1% levels respectively. Table C8—Business Courts and ROE: Regular Cohort Approach With Different Samples Dependent Variable: Log(ROE) (1) (2) Including Reincorporating Firms (4) Dropping Delaware Firms (5) (6) Keeping only Firms Incorporated Locally or in Delaware 0.049∗ 0.084∗∗ 0.081∗ 0.031∗ 0.022 (0.028) (0.038) (0.042) (0.018) (0.018) Complex Litigation -0.021 -0.114 -0.055 -0.023 -0.043∗ (0.038) (0.080) (0.078) (0.022) (0.024) Business Combination Statute 0.021 0.030 0.048∗ (0.047) (0.052) (0.024) Mandatory Staggered Board 0.071 -0.031 -0.137 (0.089) (0.103) (0.106) Constituency Statute 0.050∗∗ 0.086 0.002 (0.022) (0.059) (0.016) Pro Poison Pill Statute 0.009 0.100 0.055∗∗ (0.051) (0.077) (0.025) Strong Pro Poison Pill Statute 0.028 -0.063 -0.005 (0.081) (0.113) (0.105) Pro Poison Pill Case -0.186∗∗ 0.021 0.079∗ (0.084) (0.208) (0.040) Strong Pro Poison Pill Case 0.148∗∗ 0.048 -0.001 (0.068) (0.141) (0.028) Unocal 0.183∗∗∗ 0.245∗∗∗ 0.052 (0.065) (0.074) (0.064) Unocal Rejected -0.014 -0.007 -0.000 (0.047) (0.056) (0.018) Revlon 0.013 -0.099∗∗ 0.056 (0.050) (0.049) (0.037) Revlon Rejected 0.096∗ 0.044 0.067∗∗ (0.053) (0.041) (0.026) Blasius 0.076 0.271∗∗∗ -0.111∗∗∗ (0.067) (0.088) (0.021) Blasius Rejected -0.014 0.097∗ -0.035 (0.034) (0.052) (0.027) N 56781 56781 24483 24483 44614 44614 R2 0.039 0.040 0.059 0.062 0.042 0.043 adj. R2 0.0186 0.0196 0.0148 0.0169 0.0167 0.0168 Note: Regular cohort approach. Years 1990-2015. Variables/controls are defined in tables B.1 and B.2. All regressions cluster at the level of the state of incorporation. To be included, firms must have at least one firm-year observation before 1992 or earlier. Firms that reincorporated between 1990 and 2015 were included for purposes of regressions in columns 1 and 2, but dropped for regressions in columns 3 to 6.. * ** *** denote significance at the 10%, 5%, and 1% levels respectively. Business Court 0.035∗ (0.018) -0.002 (0.045) (3) Table C9—Business Courts and Firm Performance: Regular Cohort Approach (1990-2015) Dependent Variable: Log(ROE) (1) (2) (3) (4) Winsorized at 1 & 99% 2 & 98% (5) (6) Trimmed at 5 & 95% 1 & 99% 2 & 98% 5 & 95% 0.045∗ 0.040 0.029 0.029 0.014 0.000 (0.026) (0.025) (0.024) (0.026) (0.027) (0.024) Complex Litigation 0.036 0.038 0.025 0.028 0.041 -0.064 (0.053) (0.052) (0.048) (0.051) (0.053) (0.042) Bus. Comb. Statute -0.067 -0.069 -0.074 -0.081 -0.105∗∗∗ -0.073∗∗ (0.058) (0.058) (0.049) (0.061) (0.036) (0.035) Mand. Staggered Board -0.242∗∗∗ -0.236∗∗∗ -0.222∗∗∗ -0.233∗∗∗ -0.194∗∗∗ -0.179∗∗∗ (0.046) (0.044) (0.039) (0.043) (0.039) (0.035) Constituency Statute -0.014 -0.014 -0.018 -0.012 -0.022 -0.026 (0.040) (0.038) (0.034) (0.036) (0.032) (0.027) Pro Pois. Pill Stat. -0.070 -0.068 -0.060 -0.049 -0.049 -0.031 (0.056) (0.054) (0.044) (0.053) (0.039) (0.024) Strong Pro Pois. Pill Stat. 0.016 0.021 0.012 0.032 0.033 -0.056 (0.121) (0.114) (0.097) (0.096) (0.087) (0.055) Pro Poison Pill Case -0.071 -0.065 -0.048 -0.029 -0.021 0.054 (0.095) (0.093) (0.088) (0.096) (0.085) (0.073) Strong Pro Pois. Pill Case 0.032 0.029 0.015 0.026 -0.010 -0.065 (0.083) (0.081) (0.075) (0.078) (0.074) (0.062) Unocal 0.077 0.071 0.053 0.045 0.058 0.004 (0.078) (0.076) (0.072) (0.076) (0.078) (0.076) Unocal Rejected 0.029 0.027 0.018 0.028 0.030 0.019 (0.040) (0.039) (0.037) (0.038) (0.041) (0.040) Revlon -0.066∗ -0.063∗ -0.051 -0.062∗ -0.061∗ -0.027 (0.034) (0.034) (0.032) (0.033) (0.033) (0.034) Revlon Rejected 0.002 0.000 0.005 -0.018 -0.010 -0.006 (0.038) (0.037) (0.035) (0.036) (0.036) (0.034) Blasius 0.099 0.097 0.087 0.091 0.092 0.087 (0.092) (0.088) (0.079) (0.077) (0.079) (0.056) Blasius Rejected 0.160∗∗∗ 0.151∗∗∗ 0.146∗∗∗ 0.119∗∗∗ 0.121∗∗∗ 0.155∗∗∗ (0.043) (0.042) (0.039) (0.040) (0.037) (0.036) N 46033 46033 46033 45297 44559 42228 R2 0.062 0.064 0.068 0.066 0.068 0.070 adj. R2 0.0371 0.0393 0.0435 0.0405 0.0427 0.0433 Note: Regular cohort approach. Variables/controls are defined in tables B.1 and B.2. All regressions cluster at the level of the state of incorporation. Years 1990-2015. To be included, firms must have at least one firm-year observation in 1990 or earlier. Firms that reincorporated between 1990 and 2015 were dropped. * ** *** denote significance at the 10%, 5%, and 1% levels respectively. Business Court Table C10—Business Courts and ROE: Stacked Cohort Approach (7 year window) Dependent Variable: Log(ROE) Business Court Complex Litigation Committee Business Combination Statute Mandatory Staggered Board Constituency Statute Pro Poison Pill Statute Strong Pro Poison Pill Statute Pro Poison Pill Case Strong Pro Poison Pill Case Unocal Unocal Rejected Revlon Revlon Rejected Blasius Blasius Rejected (1) b/se (2) b/se (3) b/se (4) b/se (5) b/se (6) b/se 0.039 (0.025) -0.078∗∗ (0.029) 0.041 (0.025) -0.074∗∗ (0.030) 0.036∗ (0.020) -0.013 (0.065) 0.045 (0.027) -0.027 (0.027) 0.067∗∗ (0.026) 0.037 (0.026) -0.072∗∗ (0.028) 0.037∗ (0.019) -0.014 (0.065) 0.043 (0.027) -0.030 (0.027) -0.028 (0.042) 0.108∗∗∗ (0.022) -0.129∗∗∗ (0.018) 0.005 (0.043) 0.006 (0.029) -0.021 (0.040) -0.008 (0.019) 0.017 (0.037) 0.128∗∗∗ (0.016) 239730 0.0140 0.0133 0.051∗ (0.028) -0.130∗∗∗ (0.033) 0.053∗ (0.027) -0.128∗∗∗ (0.033) 0.032∗ (0.016) 0.128 (0.081) 0.071∗∗∗ (0.026) 0.004 (0.032) 0.014 (0.086) 0.052∗ (0.027) -0.126∗∗∗ (0.037) 0.033∗∗ (0.016) 0.128 (0.081) 0.071∗∗∗ (0.026) -0.002 (0.033) -0.014 (0.108) 0.053 (0.071) -0.075 (0.064) 0.039 (0.040) 0.000 (0.055) -0.016 (0.027) 0.059 (0.037) 0.055∗∗ (0.027) 0.043 (0.045) 239730 0.0469 0.0417 N 239730 239730 239730 239730 R2 0.0137 0.0138 0.0467 0.0469 adj. R2 0.0131 0.0132 0.0415 0.0417 Fixed Effects: ES-Firm FE Yes Yes Yes Yes Yes Yes ES-Year FE Yes Yes Yes Yes Yes Yes HQ state-year FE No No No Yes Yes Yes Note: Stacked cohort approach. Event sample spans 3 years on either side of the treatment year. Dependent variable is log(ROE). Variables/controls are defined in tables B.2 and B.3. All regressions cluster at the level of state of incorporation. ES-Firm FE stands for event-sample firm fixed effects. ES-Year FE stands for event-sample year fixed effects. To be included, firms must have at least one firm-year observation before 1994. Firms that reincorporated between 1994 and 2015 were dropped. * ** *** denote significance at the 10%, 5%, and 1% levels respectively. Table C11—Business Courts and ROE: Dropping Firms Headquartered in Geographical Regions Dependent Variable: log(ROE) Business Court Complex Lit N R2 adj. R2 Dropping firms headquartered in Census Region: (1) b/se (2) b/se (3) b/se (4) b/se 0.019 (0.048) 0.063 (0.039) 38186 0.035 0.0091 0.064∗∗ (0.024) -0.015 (0.045) 41348 0.031 0.0090 0.073∗∗∗ (0.024) 0.070 (0.054) 35944 0.032 0.0098 0.052∗∗ (0.023) 0.035 (0.042) 52261 0.032 0.0093 Northeast Midwest South West Controlling for HQ state-year FE Yes Yes Yes Yes Firm FE Yes Yes Yes Yes Note: Regular cohort approach. Years 1990-2015. Dependent variable is log (ROE). U.S. Census definitions are used for regions. Other variables/controls are defined in tables B.1 and B.2. All regressions cluster at the level of the state of incorporation. To be included, firms must have at least one firm-year observation before 1994. Firms that reincorporated between 1994 and 2015 were dropped. Column 1 drops firms headquartered in the Northeast, column 2 drops firms headquartered in the Midwest, column 3 drops firms headquartered in the South, and column 4 drops firms headquartered in the West. * ** *** denote significance at the 10%, 5%, and 1% levels respectively. Table C12—Business Courts and Firm Performance: Stacked Cohort Approach (3 year window) Dependent Variable: Log(ROA) Business Court Complex Lit Business Combination Statute Mandatory Staggered Board Constituency Statute Pro Poison Pill Statute Strong Pro Poison Pill Statute Pro Poison Pill Case Strong Pro Poison Pill Case Unocal Unocal Rejected Revlon Revlon Rejected Blasius Blasius Rejected (1) b/se (2) b/se (3) b/se (4) b/se (5) b/se (6) b/se 0.051∗∗ (0.023) -0.009 (0.062) 0.050∗∗ (0.023) -0.006 (0.061) 0.031∗∗ (0.016) -0.153∗∗ (0.072) -0.006 (0.048) -0.118∗∗∗ (0.042) 0.167∗∗ (0.080) 0.042∗ (0.024) 0.002 (0.068) 0.027∗ (0.015) -0.154∗∗ (0.072) -0.011 (0.046) -0.125∗∗∗ (0.036) -0.042 (0.072) 0.218∗ (0.119) -0.272∗∗∗ (0.061) 0.077 (0.100) 0.019 (0.048) -0.099 (0.094) -0.124 (0.084) -0.002 (0.060) 0.290∗∗∗ (0.061) 219610 0.0254 0.0247 0.034∗∗ (0.017) -0.030 (0.054) 0.034∗ (0.017) -0.025 (0.053) 0.034 (0.030) 0.027 (0.083) -0.015 (0.021) -0.107∗ (0.059) 0.167∗∗ (0.069) 0.032∗ (0.018) -0.016 (0.060) 0.035 (0.031) 0.026 (0.083) -0.018 (0.020) -0.107∗ (0.060) 0.047 (0.068) 0.026 (0.085) -0.070 (0.064) 0.034 (0.088) 0.003 (0.044) -0.097 (0.066) -0.058 (0.060) 0.095 (0.072) 0.152∗∗∗ (0.047) 219610 0.0662 0.0605 N 219610 219610 219610 219610 R2 0.0247 0.0249 0.0659 0.0660 adj. R2 0.0241 0.0243 0.0604 0.0605 Fixed Effects: ES-Firm FE Yes Yes Yes Yes Yes Yes ES-Year FE Yes Yes Yes Yes Yes Yes HQ state-year FE No No No Yes Yes Yes Note: Stacked cohort approach. Event sample spans 3 years on either side. Dependent variable is ROA. Variables/controls are defined in tables B.2 and B.3. All regressions cluster at the level of state of incorporation. ES-Firm FE stands for event-sample firm fixed effects. ES-Year FE stands for eventsample year fixed effects. To be included, firms must have at least one firm-year observation before 1994. Firms that reincorporated between 1994 and 2015 were dropped. The baseline mean denotes the mean Tobin’s q of firms incorporated in treatment states in the years before the treatment. * ** *** denote significance at the 10%, 5%, and 1% levels respectively. Table C13—Mergers: Regular Cohort Approach With Different Samples Dependent Variable: Completed Mergers with Positive CAR for Target Shareholders (1) (2) Including reincorporating firms Business Court Complex Litigation Bus. Comb. Stat. Mand. Staggered Board Constituency Statute Pro Pois. Pill Stat. Str. Pro Pois. Pill Stat. (4) Dropping Delaware firms (5) (6) Keeping only firms incorporated locally or in Delaware 0.005∗∗ (0.003) 0.002 (0.003) 0.002 (0.002) -0.008 (0.007) -0.000 (0.001) 0.002 (0.001) 0.001 (0.003) 0.006∗∗ (0.003) -0.000 (0.002) 0.001 (0.003) -0.009 (0.007) -0.001 (0.001) 0.000 (0.002) 0.001 (0.004) -0.003 (0.008) 0.005 (0.007) -0.006 (0.004) 0.005∗∗ (0.002) 0.006∗∗ (0.002) -0.004 (0.002) -0.001 (0.004) -0.005 (0.003) 0.006∗∗ (0.003) -0.002 (0.002) 0.008∗∗∗ (0.002) -0.003 (0.003) 0.001 (0.003) -0.007∗∗ (0.003) 0.007 (0.005) 0.008∗∗ (0.004) -0.008∗∗ (0.003) 0.005 (0.003) -0.006 (0.004) -0.001 (0.003) -0.008∗∗ (0.004) 0.010∗ (0.005) -0.014 (0.012) 0.008 (0.007) -0.004 (0.005) 0.002 (0.004) 0.007 (0.004) -0.004 (0.004) -0.003 (0.007) -0.011∗∗ (0.005) 0.003 (0.003) -0.001 (0.002) 0.001 (0.002) -0.021 (0.021) -0.003 (0.003) 0.003 (0.003) 0.013 (0.008) -0.000 (0.003) -0.005 (0.003) 0.001 (0.002) -0.025 (0.021) -0.002 (0.003) 0.002 (0.003) 0.010 (0.008) -0.006 (0.007) 0.022∗∗∗ (0.006) -0.004 (0.008) 0.009∗∗ (0.004) 0.009 (0.005) 0.003 (0.005) 0.007 (0.005) -0.007 (0.005) 0.009 0.009 0.009 0.009 0.009 0.009 Pro Poison Pill Case Str. Pro Pois. Pill Case Unocal Unocal Rejected Revlon Revlon Rejected Blasius Blasius Rejected Baseline mean: (3) N 54344 54344 22171 22171 41748 41748 R2 0.022 0.022 0.054 0.055 0.028 0.028 adj. R2 0.0030 0.0031 0.0124 0.0126 0.0038 0.0039 Note: Regular cohort approach. Variables/controls are defined in tables B.1 and B.2. All regressions cluster at the level of the most recent state of incorporation. Years 1990-2015. To be included, firms must have at least one firm-year observation in 1990 or earlier. Firms that reincorporated between 1990 and 2015 were dropped. * ** *** denote significance at the 10%, 5%, and 1% levels respectively. Table C14—Business Courts and Takeovers: Dropping Firms Headquartered in Geographical Regions Binary Dependent Variable: Firm Target in Merger With Positive CAR for Target Shareholders (1) b/se (2) b/se (3) b/se (4) b/se 0.008∗∗ (0.004) -0.000 (0.001) 0.006∗∗ (0.003) -0.001 (0.001) 0.007∗∗ (0.003) -0.000 (0.001) 0.007∗∗ (0.003) -0.001 (0.001) BM: 0.009 0.010 0.009 0.009 N R2 adj. R2 34624 0.026 0.0025 38354 0.024 0.0032 33251 0.026 0.0055 47719 0.025 0.0038 Northeast Midwest South West Business Court Complex Litigation Program Dropping firms headquartered in Census Region: Controlling for HQ state-year FE Yes Yes Yes Yes Firm FE Yes Yes Yes Yes Note: Regular cohort approach. Linear Probability Model. The dependent variable is a binary variable that captures whether the corporation was a target in a completed merger with positive Cumulative abnormal returns for the target shareholders. U.S. Census definitions are used for regions. Other variables/controls are defined in tables B.1 and B.2. All regressions cluster at the level of the state of incorporation. To be included, firms must have at least one firm-year observation before 1994. Firms that reincorporated between 1994 and 2015 were dropped. Column 1 drops firms headquartered in the Northeast, column 2 drops firms headquartered in the Midwest, column 3 drops firms headquartered in the South, and column 4 drops firms headquartered in the West. * ** *** denote significance at the 10%, 5%, and 1% levels respectively. Table C15—Business Courts and Takeovers (Regular Cohort Approach, 1990-2015) Binary dependent variable: did corporation become a merger target in any merger in a merger with positive CAR for negative CAR for target shareholders target shareholders Business Court (1) b/se (2) b/se (3) b/se (4) b/se (5) b/se (6) b/se 0.000 (0.003) -0.004∗∗∗ (0.001) -0.001 (0.002) -0.010 (0.007) -0.002 (0.001) 0.002 (0.002) 0.002 (0.002) 0.000 (0.001) 0.002 (0.003) -0.011 (0.007) -0.003∗∗∗ (0.001) 0.002 (0.002) -0.002 (0.001) -0.004∗∗∗ (0.001) -0.001 (0.001) 0.001∗∗ (0.000) 0.001 (0.001) 0.000 (0.001) 69225 0.022 0.0048 0.003 (0.002) -0.002∗ (0.001) 0.002 (0.002) -0.014∗ (0.008) -0.003∗∗ (0.001) -0.000 (0.002) 0.009∗∗∗ (0.003) -0.011∗∗ (0.005) 0.014∗∗∗ (0.005) -0.001 (0.003) 0.007∗∗∗ (0.002) 0.005∗ (0.003) 0.001 (0.002) 0.001 (0.003) -0.010∗∗∗ (0.002) 69225 0.022 0.0049 69225 0.013 -0.0043 -0.002∗ (0.001) -0.004∗∗∗ (0.001) -0.001 (0.001) -0.001 (0.001) 0.001 (0.001) 0.000 (0.001) 0.004∗ (0.002) -0.002 (0.005) 0.003 (0.005) -0.005∗ (0.003) -0.002∗∗ (0.001) 0.000 (0.002) 0.001 (0.002) -0.001 (0.002) -0.002 (0.001) 69225 0.013 -0.0044 0.008 0.008 0.002 0.002 N R2 adj. R2 69225 0.020 0.0029 0.001 (0.003) -0.007∗∗∗ (0.002) -0.000 (0.002) -0.014∗ (0.008) -0.002 (0.002) -0.000 (0.002) 0.012∗∗∗ (0.002) -0.015∗ (0.008) 0.018∗∗ (0.009) -0.006 (0.005) 0.004∗ (0.003) 0.005 (0.004) 0.003 (0.002) 0.000 (0.004) -0.012∗∗∗ (0.002) 69225 0.021 0.0030 BM: 0.010 0.010 Complex Litigation Bus. Comb. Statute Mand. Staggered Board Constituency Statute Pro Poison Pill Statute Stro. Pro Pois. Pill Stat. Pro Poison Pill Case Str. Pro Pois. Pill Case Unocal Unocal Rejected Revlon Revlon Rejected Blasius Blasius Rejected Controls: Takeover Statutes Yes Yes Yes Yes Yes Yes Takeover Cases No Yes No Yes No Yes Firm FE Yes Yes Yes Yes Yes Yes HQ-year FE Yes Yes Yes Yes Yes Yes Note: Regular cohort approach. Linear probability model. Dependent variable is binary and captures if corporation was, in a given year, a target in at least one completed merger (columns 1-2), or a target in at least one completed merger with positive CAR for the target shareholders (columns 3-4), or a target in at least one completed merger with positive CAR for the buyer’s shareholders (columns 5-6). All regressions control for firm fixed effects, headquarters-state year fixed effects, as well as the creation of complex litigation programs. All regressions cluster at the level of the headquarters state. Firms that reincorporated between 1994 and 2015 were dropped. Firms must have at least one firm-year observation before 1992 to be included. B.M denotes the mean for firm-year observations in treatment states before the treatment. ”Hq-yr” means headquarters state year fixed effects. CAR and takeovers as defined in text. * ** *** denote significance at the 10%, 5%, and 1% levels respectively. Table C16—Business Courts and Takeovers (Stacked Cohort Approach, 1994-2015) Binary dependent variable: did corporation become merger target in any merger in merger with positive CAR for negative CAR for target shareholders target shareholders Business Court Complex Litigation Bus. Comb. Stat. Mand. Staggered Board Constituency Statute Pro Pois. Pill Stat. Str. Pro Pois. Pill Stat. (1) b/se (2) b/se (3) b/se (4) b/se (5) b/se (6) b/se 0.005 (0.004) -0.016∗∗∗ (0.003) -0.002 (0.004) -0.020 (0.014) -0.001 (0.002) -0.000 (0.005) 0.001 (0.005) 0.008∗ (0.004) -0.017∗∗∗ (0.003) -0.002 (0.003) -0.020 (0.014) -0.001 (0.003) -0.001 (0.005) 0.001 (0.006) 0.002 (0.010) 0.011 (0.011) 0.003 (0.005) 0.013∗ (0.007) 0.001 (0.002) -0.019∗∗ (0.007) 0.006 (0.004) -0.002 (0.006) 0.006 (0.004) -0.006∗∗∗ (0.002) 0.003 (0.003) -0.020 (0.014) -0.001 (0.002) 0.004 (0.004) -0.002 (0.004) 0.008∗∗ (0.004) -0.007∗∗∗ (0.002) 0.003 (0.003) -0.020 (0.014) -0.001 (0.002) 0.003 (0.004) -0.001 (0.005) 0.009 (0.011) 0.003 (0.006) 0.002 (0.005) 0.012 (0.007) -0.000 (0.002) -0.018∗∗ (0.007) 0.006 (0.004) -0.002 (0.006) -0.000 (0.001) -0.009∗∗∗ (0.001) 0.000 (0.001) -0.000 (0.000) -0.000 (0.001) -0.004 (0.003) 0.001 (0.002) -0.000 (0.001) -0.010∗∗∗ (0.001) 0.000 (0.001) -0.000 (0.000) -0.000 (0.001) -0.004 (0.003) -0.002 (0.003) 0.000 (0.007) 0.004 (0.008) -0.000 (0.002) 0.004∗ (0.002) 0.001 (0.001) -0.007∗∗∗ (0.002) -0.001 (0.001) 0.005∗∗ (0.002) 250788 0.026 0.0213 250788 0.026 0.0214 250788 0.025 0.0209 250788 0.025 0.0211 250788 0.024 0.0194 250788 0.024 0.0194 0.010 0.010 0.009 0.009 0.001 0.001 Pro Poison Pill Case Str. Pro Pois. Pill Case Unocal Unocal Rejected Revlon Revlon Rejected Blasius Blasius Rejected N R2 adj. R2 Baseline mean Controls: Takeover Statutes Yes Yes Yes Yes Yes Yes Takeover Cases No Yes No Yes No Yes Firm FE Yes Yes Yes Yes Yes Yes HQ-year FE Yes Yes Yes Yes Yes Yes Note: Stacked cohort approach. Seven year window (three years on either side). Linear probability model. Dependent variable is binary and captures if corporation was, in a given year, a target in at least one completed merger (columns 1-2), or a target in at least one completed merger with positive CAR for the target shareholders (columns 3-4), or a target in at least one completed merger with positive CAR for the buyer’s shareholders (columns 5-6). All regressions control for firm fixed effects, headquarters-state year fixed effects, as well as the creation of complex litigation programs. All regressions cluster at the level of the headquarters state. Firms that reincorporated between 1994 and 2015 are included. Firms must have at least one firm-year observation before 1992 to be included. B.M denotes the mean for firm-year observations in treatment states before the treatment. ”Hq-yr” means headquarters state year fixed effects. CAR and takeovers as defined in text. * ** *** denote significance at the 10%, 5%, and 1% levels respectively. Table C17—Business Courts and Firm Performance: Placebo Test (Stacked Cohort Approach) Tobin’s q Business Court (minus 3 years) Business Court (minus 5 years) Business Court (minus 7 years) Controls: Fixed Effects: ES-Firm FE HQ state-year FE Takeover statutes and cases ROA ROE b/se b/se b/se b/se b/se b/se -0.001 (0.017) -0.004 (0.013) -0.016∗ (0.010) 0.005 (0.015) 0.006 (0.013) -0.004 (0.010) 0.012 (0.021) 0.022 (0.019) -0.037∗ (0.022) 0.020 (0.019) 0.028 (0.020) -0.035 (0.029) -0.003∗ (0.002) -0.005∗∗ (0.003) -0.002 (0.004) -0.003∗ (0.002) -0.003 (0.002) -0.000 (0.004) Yes Yes No Yes Yes Yes Yes Yes No Yes Yes Yes Yes Yes No Yes Yes Yes Note: Placebo years are obtained by moving treatment years 3, 5, and 7 years into the past. The dataset was ”moved” accordingly, so that the placebo datasets span the years 1987-2012, 1985-2010, and 19832008. Event sample spans 3 years on either side. Variables/controls are defined in tables B.1 and B.2 All regressions cluster at the level of the state of incorporation. ES-Firm FE stands for event-sample firm fixed effects. To be included, firms must have at least one firm-year observation before 1994. Firms that reincorporated between 1994 and 2015 were dropped. The baseline mean denotes the mean Tobin’s q of firms incorporated in treatment states in the years before the treatment. * ** *** denote significance at the 10%, 5%, and 1% levels respectively. The 5-year placebo test controls for complex litigation programs; for the 7 and 9 year tests, this variable had to be dropped since the relevant variable was zero for all firm-year observations. Whereas all regressions (2), (4), and (6) control for takeover statutes and cases, the variable ”strong pro poison pill statute” had to be dropped for the seven and nine year placebo tests, since the variable was zero for all firm year observations.