Opinion Testimony Backed by Financial Economic Training & Research
Founded by leading financial researcher J.B. Heaton, One Hat Research LLC applies financial economics to help triers of fact understand financial evidence and determine financial facts in issue.
Top Credentials + Unmatched Research
Solvency Tests in Bankruptcy and Corporate Law
J.B. Heaton, J.D., M.B.A., Ph.D. is the world's leading researcher on the law and financial economics of solvency testing. Many solvency "experts" have no advanced education in finance and no published research. J.B.'s research is published and cited by courts and scholars around the world. These include:
“Debt and Insolvency,” Review of Banking and Financial Law Vol. 38, 363-388 (2019).
“Solvency Tests,” Business Lawyer, Vol. 62, No. 3, 983-1006 (2007). (peer-reviewed), cited in Koch Foods, Inc. v. Pate Dawson Co., Inc., No. 3:16-CV-355-DCB-MTP, 2017 WL 4818426, at *5 (S.D. Miss. Oct. 25, 2017); USA Trouser, S.A. de C.V. v. Andrews, 612 F. App'x 158, 161 (4th Cir. 2015); In re Teleglobe Commc'ns Corp., 392 B.R. 561, 602 (Bankr. D. Del. 2008).
“Deepening Insolvency,” The Journal of Corporation Law, Vol. 30, No. 3, pp. 465-500 (2005), cited in In re Parmalat Sec. Litig., 501 F. Supp. 2d 560, 576 (S.D.N.Y. 2007), aff'd sub nom. Pappas v. Bank of Am. Corp., 309 F. App'x 536 (2d Cir. 2009); Christians v. Grant Thornton, LLP, 733 N.W.2d 803, 811 (Minn. Ct. App. 2007); In re James River Coal Co., 360 B.R. 139, 178 (Bankr. E.D. Va. 2007); In re CitX Corp., Inc., 448 F.3d 672, 680 (3d Cir. 2006); In re Sage Enterprises, Inc., No. 04 A 03014, 2006 WL 1722582, at *18 (Bankr. N.D. Ill. Apr. 28, 2006); In re Oakwood Homes Corp., 340 B.R. 510, 535 (Bankr. D. Del. 2006).
Cost of Capital Studies
Cost of capital is a technical concept in general equilibrium theory. Experts lacking training in financial economics of asset valuation at the Ph.D. level expose clients and counsel to high risk of failure before a trier of fact.
J.B. testified in December 2019 on behalf of the State of Minnesota to clarify the proper determination of cost of capital for the valuation of utility property, identifying serious errors in the approach of a business appraiser without adequate understanding of the underlying economics.
Price Impact and Materiality in Securities Litigation
In the 1980s, courts adopted event study methodologies and concepts of statistical evidence based on the misunderstandings of untrained lawyer-expert witnesses. J.B. Heaton's research on event studies has changed this unjust use of financial evidence, with seven U.S. federal courts relying on that research in the last four years, including the United States Court of Appeals for the Second Circuit:
"Indeed, indirect evidence is particularly valuable in situations where direct evidence does not entirely resolve the question. Event studies offer the seductive promise of hard numbers and dispassionate truth, but methodological constraints limit their utility in the context of single-firm analyses. See generally Alon Brav & J.B. Heaton, Event Studies in Securities Litigation: Low Power, Confounding Effects, and Bias, 93 Wash. U. L. Rev. 583 (2015); see also id. at 588 n.11 (collecting academic criticism of single-firm event studies). Notably, small sample sizes may limit statistical power, meaning that only very large-impact events will be detectable. See id. at 589–605. In addition, it can be extremely difficult to isolate the price impact of any one piece of information in the presence of confounding factors, such as other simultaneously released news about the company, the industry, or the geographic region. See id. at 605–08. These methodological challenges counsel against imposing a blanket rule requiring district courts to, at the class certification stage, rely on directional event studies and directional event studies alone." In re Petrobras Sec., 862 F.3d 250, 278–79 (2d Cir. 2017).
Additional cases citing this published research:
In re Chicago Bridge & Iron Co. N.V. Sec. Litig., No. 17 CIV. 01580 (LGS), 2019 WL 5287980, at *16 n.106 (S.D.N.Y. Oct. 18, 2019).
Monroe Cty. Employees' Ret. Sys. v. S. Co., 332 F.R.D. 370, 394 (N.D. Ga. 2019).
Rooney v. EZCORP, Inc., 330 F.R.D. 439, 450 n.9 (W.D. Tex. 2019).
Pirnik v. Fiat Chrysler Automobiles, N.V., 327 F.R.D. 38, 46 (S.D.N.Y. 2018).
Strougo v. Barclays PLC, 312 F.R.D. 307, 322 n.94 (S.D.N.Y. 2016).
Carpenters Pension Tr. Fund of St. Louis v. Barclays PLC, 310 F.R.D. 69, 85 n.100 (S.D.N.Y. 2015).
Additional relevant published research:
J.B. Heaton, J.D., M.B.A., Ph.D. (Finance)
J.B. Heaton is a global leader in developing practical valuation and economic insights. He founded One Hat Research LLC in 2019 to provide expert witness testimony in the areas of his research.
J.B. received his J.D., M.B.A., and Ph.D. (with a finance concentration) from the University of Chicago. He was a litigation partner at a Chicago-based law firm for 14 years while maintaining an active research agenda and teaching - at various times - at the law and business schools of the University of Chicago and Duke University and the law school of Northwestern University.
Much of J.B.'s research is available for free download at SSRN. His Google Scholar site is here. Cases, briefs, and law review articles citing his research are available on Lexis and Westlaw, and on request. His CV is available here. Additional thoughts can be found here.
One Hat Research LLC
20 West Kinzie Street, 17th Floor
Chicago, Illinois 60654
(312) 257-3900
Why One Hat?
"One Hat" is an anagram of Heaton. Trained as a lawyer and a financial economist, the name refers to J.B.'s aspiration - now realized - to focus on work as a financial economist, to wear "one hat" instead of two.