The Influence of Litigation Procedure with Involvement of Government Bodies and State-owned Enterprises on Capitalization of Public Companies

There was an attempt to evaluate the reaction of the market stock price change when the news about litigation procedure with a public party was announced in the research. The cases that concerned Russian courts and Russian public authorities’ participation were taken into account in order to investigate the reputation that Russian judicial system has in the market. The author evaluated probable risks that are usually reflected when such announcements were made. The research was conducted based on two methods – event-study method and case study, thus, different types of data are observed. The case study showed that investors anticipated more benefits for a private party in case of сlaimant role. As for a respondent role, the opposite can be stated: risk of market loss, administrative fines, and reputational damages. Turning to an event study method, it can be observed that there are stock price changes when the announcement about litigation proceedings is published. The significance test showed that null hypothesis shall not be rejected.  The author presents the further steps for research and makes suggestions for method improvement and data collection.