The Market for Justice: Burford Capital and the Litigation Finance Industry

Lauren  Cohen; Christopher  Malloy; William  Powley

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Case | HBS Case Collection | October 2017

The Market for Justice: Burford Capital and the Litigation Finance Industry

by Lauren Cohen, Christopher Malloy and William Powley

Language: English

Format: Print

16 pages

Educators Purchase

Citation:

Cohen, Lauren, Christopher Malloy, and William Powley. "The Market for Justice: Burford Capital and the Litigation Finance Industry." Harvard Business School Case 218-007, October 2017.

About the Authors

Lauren H. Cohen

L.E. Simmons Professor of Business Administration

Finance

Entrepreneurial Management

View Profile »
View Publications »

Christopher J. Malloy

Sylvan C. Coleman Professor of Financial Management (Leave of Absence)

Finance

Entrepreneurial Management

View Profile »
View Publications »

More from these Authors

Article | Journal of Finance | June 2020

Lazy Prices

Lauren Cohen, Christopher J. Malloy, Quoc Nguyen, Lauren Cohen, Christopher J. Malloy and Quoc Nguyen

We explore the implications of a subtle "default" choice that firms make in their regular reporting practices, namely that firms typically repeat what they most recently reported. Using the complete history of regular quarterly and annual filings by U.S. corporations from 1995 to 2014, we show that when firms make an active change in their reporting practices, this conveys an important signal about the firm. Changes to the language and construction of financial reports have strong implications for firms' future returns: a portfolio that shorts "changers" and buys "non-changers" earns up to 188 basis points per month (over 22% per year) in abnormal returns in the future. These reporting changes are concentrated in the management discussion (MD&A) section. Changes in language referring to the executive (CEO and CFO) team, or regarding litigation, are especially informative for future returns.

Keywords: information; default behavior; inertia; firms; annual reports; disclosure; Information; Business or Company Management; Behavior; Corporate Disclosure; Financial Reporting; United States;

Citation:
Cohen, Lauren, Christopher J. Malloy, and Quoc Nguyen. "Lazy Prices." Journal of Finance 75, no. 3 (June 2020): 1371–1415. (Winner of the First Prize, Chicago Quantitative Alliance Academic Paper Competition, 2016. Winner of the Jack Treynor Prize for superior work in the field of investment management and financial markets, sponsored by the Q-Group,The Institute for Quantitative Research in Finance, 2016. Winner of the Hillcrest Behavioral Finance Prize, 2016.) View Details

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Article | Journal of Finance | June 2020

Lazy Prices

Lauren Cohen, Christopher J. Malloy, Quoc Nguyen, Lauren Cohen, Christopher J. Malloy and Quoc Nguyen

We explore the implications of a subtle "default" choice that firms make in their regular reporting practices, namely that firms typically repeat what they most recently reported. Using the complete history of regular quarterly and annual filings by U.S. corporations from 1995 to 2014, we show that when firms make an active change in their reporting practices, this conveys an important signal about the firm. Changes to the language and construction of financial reports have strong implications for firms' future returns: a portfolio that shorts "changers" and buys "non-changers" earns up to 188 basis points per month (over 22% per year) in abnormal returns in the future. These reporting changes are concentrated in the management discussion (MD&A) section. Changes in language referring to the executive (CEO and CFO) team, or regarding litigation, are especially informative for future returns.

Keywords: information; default behavior; inertia; firms; annual reports; disclosure; Information; Business or Company Management; Behavior; Corporate Disclosure; Financial Reporting; United States;

Citation:
Cohen, Lauren, Christopher J. Malloy, and Quoc Nguyen. "Lazy Prices." Journal of Finance 75, no. 3 (June 2020): 1371–1415. (Winner of the First Prize, Chicago Quantitative Alliance Academic Paper Competition, 2016. Winner of the Jack Treynor Prize for superior work in the field of investment management and financial markets, sponsored by the Q-Group,The Institute for Quantitative Research in Finance, 2016. Winner of the Hillcrest Behavioral Finance Prize, 2016.) View Details

Cite View Details SSRN SSRN Find at Harvard Find at Harvard Related
Case | HBS Case Collection | May 2019 (Revised May 2020)

fidentiaX: The Tradable Insurance Marketplace on Blockchain

Alexander Braun, Lauren H. Cohen and Jiahua Xu

Three years ago, Alvin Ang and his partner founded fidentiaX in Singapore, with the ambition to create the world’s first marketplace for tradable insurance policies on blockchain. With a 26-page white paper, the start-up closed a successful fundraising round through an initial coin offering (ICO). Three years later, however, the company still had not completed the infrastructure for the insurance trading platform. Besides the rapidly dwindling funds, fidentiaX had to fight with a tardy development team, uncooperative incumbent insurers, and begrudging investors. The case provides an overview of the blockchain industry and insights into the secondary life insurance market. Through the case, students will assess the company’s business strategies and learn about typical challenges faced by technology start-ups.

Keywords: Blockchain; Insurance; Corporate Entrepreneurship; Technology Adoption; Business Strategy; Insurance Industry; Technology Industry; Singapore;

Citation:
Braun, Alexander, Lauren H. Cohen, and Jiahua Xu. "fidentiaX: The Tradable Insurance Marketplace on Blockchain." Harvard Business School Case 219-116, May 2019. (Revised May 2020.) View Details

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The Market for Justice: Burford Capital and the Litigation Finance Industry

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About the Authors

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