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Full-Text Articles in Law
Lead Plaintiff Incentives In Aggregate Litigation, Charles R. Korsmo, Minor Myers
Lead Plaintiff Incentives In Aggregate Litigation, Charles R. Korsmo, Minor Myers
Faculty Publications
The lead plaintiff role holds out considerable promise in promoting the deterrence and compensation goals of aggregate litigation. The prevailing approach to compensating lead plaintiffs, however, provides no real incentive for a lead plaintiff to bring claims on behalf of a broader group. The policy challenge is to induce sophisticated parties to press claims not in their individual capacity but instead in a representative capacity, conferring a positive externality on all class members by identifying attractive claims, financing ongoing litigation, and managing the work of attorneys. We outline what an active and engaged lead plaintiff could add to the civil …
Selling Stock And Selling Legal Claims: Alienability As A Constraint On Managerial Opportunism, Charles R. Korsmo
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 …