Law Commons^™

Public Ownership. Firm Governance, And Litigation Risk, Eric L. Talley

Faculty Scholarship

Many going-private transactions are motivated – at least ostensibly – by the desire to escape the burdens and costs of public ownership. Although these burdens have many purported manifestations, one commonly cited is the risk of litigation, which may be borne both directly by the firm and/or its fiduciaries or reflected in director and officer insurance premia funded at company expense. An important issue for the "litigation risk" justification of privatization is whether alternative (and less expensive) steps falling short of going private – such as governance reforms – may augur sufficiently against litigation exposure. In this Article, I consider …