We exploit a U.S. Supreme Court ruling on diversity of citizenship in legal disputes to estimate the contribution of the court system to firm value. In an event study, we find that an increase in state court quality from bottom to top tercile is associated with an average increase in equity...

This paper seeks to explain how courts in new and vulnerable democracies acquire legitimacy and thus become credible actors able to facilitate or even foster the consolidation of democracy. It analyses the case of the Constitutional Court of Benin (CCB), demonstrating that governmental...