Law Commons^™

The Exit Theory Of Judicial Appraisal, William J. Carney, Keith Sharfman

Faculty Publications

For many years, we and other commentators have observed the problem with allowing judges wide discretion to fashion appraisal awards to dissenting shareholders based on widely divergent, expert valuation evidence submitted by the litigating parties. The results of this discretionary approach to valuation have been to make appraisal litigation less predictable and therefore more costly and likely. While this has been beneficial to professionals who profit from corporate valuation litigation, it has been harmful to shareholders, making deals costlier and less likely to be completed.

In this Article, we propose to end the problem of discretionary judicial valuation by tracing …

Selling Stock And Selling Legal Claims: Alienability As A Constraint On Managerial Opportunism, Charles R. Korsmo

Faculty Publications

Scholars have long recognized the importance of market forces as a tool for disciplining the management of public corporations and reducing agency costs. If managers loot or otherwise mismanage the firm, the firm’s stock price will suffer, raising its cost of capital and leaving managers exposed to the threat of a hostile takeover. In recent decades, changing patterns of stock ownership have threatened the viability of this market check on mismanagement. Institutional investors, and particularly index funds, own an increasing portion of publicly traded firms, and face substantial liquidity and other barriers to simply selling their positions. To the extent …

A Reconsideration Of The Stock Market Exception To The Dissenting Shareholder's Right Of Appraisal, Robert H. Jerry Ii

Faculty Publications

Legislation has attempted to balance fairly the interests of the dissenting shareholder against the corporation's need to reorganize in response to changing economic conditions. The bull market that lasted through 1972 persuaded many drafters of corporate statutes that a dissenting shareholder's interests were adequately protected if he could sell his shares on the market. Accordingly, they promulgated the stock market exception to limit the situations in which the appraisal remedy might inhibit needed corporate flexibility. Low stock prices during 1973 and 19741 have generated a need to reassess this balancing of interests and to reconsider the desirability of the stock …