MicroStrategy, Inc. and its auditor, PricewaterhouseCoopers, were named in a class action lawsuit that alleged that the announcement had caused a one-day $11 billion drop in the market capitalization of MicroStrategy’s common stock.
Retained by Arnold & Porter
In March 2000, MicroStrategy, Inc. announced that it was restating its 1997, 1998, and 1999 financial results. Subsequently, the company and its auditor, PricewaterhouseCoopers, were named in a class action lawsuit that alleged that the announcement had caused a one-day $11 billion drop in the market capitalization of MicroStrategy’s common stock. According to an estimate by the plaintiffs’ expert, this resulted in damages to class members in excess of $600 million. Cornerstone Research worked with Professor William Beaver of the Stanford Graduate School of Business, who conducted an event study and determined that changes in MicroStrategy’s market capitalization were largely unrelated to its reported financials. He also evaluated the opposing expert’s report.