Open Access. Powered by Scholars. Published by Universities.®

Securities Law Commons

Open Access. Powered by Scholars. Published by Universities.®

Articles 1 - 2 of 2

Full-Text Articles in Securities Law

Unleashing A Gatekeeper: Why The Sec Should Mandate Disclosure Of Details Concerning Directors' And Officers' Liability Insurance Policies, Sean J. Griffith Mar 2005

Unleashing A Gatekeeper: Why The Sec Should Mandate Disclosure Of Details Concerning Directors' And Officers' Liability Insurance Policies, Sean J. Griffith

All Faculty Scholarship

This Essay explores the connection between corporate governance and D&O insurance. It argues that D&O insurers act as gatekeepers and guarantors of corporate governance, screening and pricing corporate governance risks to maintain the profitability of their risk pools. As a result, D&O insurance premiums provide the insurer’s assessment of a firm’s governance quality. Most basically, firms with relatively worse corporate governance pay higher D&O premiums. This simple relationship could signal important information to investors and other capital market participants. Unfortunately, the signal is not being sent. Corporations lack the incentive to produce this disclosure themselves, and U.S. securities regulators do …


Predictions, Projections, And Precautions: Conveying Cautionary Warnings In Corporate Forward-Looking Statements, Susanna Ripken Jan 2005

Predictions, Projections, And Precautions: Conveying Cautionary Warnings In Corporate Forward-Looking Statements, Susanna Ripken

Susanna K. Ripken

This article discusses the problems that are created when corporate insiders make public predictions about the future prospects of their business. Investors crave these types of forward-looking corporate disclosures because investors use them to make judgments about the future profitability of companies. Corporations, however, are often reluctant to make predictions and projections because sometimes the predictions fail to come true, and investors may then sue corporations for misleading the market. Congress enacted a controversial statutory safe harbor designed to encourage corporations to make forward-looking statements. The safe harbor immunizes corporations from liability so long as they include meaningful cautionary warnings …