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The Supreme Court’S Impact On Securities Class Actions: An Empirical Assessment Of Tellabs, Adam C. Pritchard, Stephen Choi
The Supreme Court’S Impact On Securities Class Actions: An Empirical Assessment Of Tellabs, Adam C. Pritchard, Stephen Choi
Law & Economics Working Papers Archive: 2003-2009
Using a sample of securities fraud class actions filed between 2003 and 2007, we study the impact of a widely-followed Supreme Court decision from that period, Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308 (2007). This decision clarified the law with respect to one of the most hotly contested issues in securities litigation: pleading scienter. The Tellabs decision reversed a very lenient Seventh Circuit decision with respect to pleading scienter, but replaced it with a standard that is nonetheless relatively generous to plaintiffs. Looking at opinions resolving motions to dismiss decided before and after that decision, we …
Securities Class Actions Move North: A Doctrinal And Empirical Analysis Of Securities Class Actions In Canada, Adam C. Pritchard, Janis P. Sarra
Securities Class Actions Move North: A Doctrinal And Empirical Analysis Of Securities Class Actions In Canada, Adam C. Pritchard, Janis P. Sarra
Law & Economics Working Papers Archive: 2003-2009
A number of Canadian provinces recently have adopted legislation providing shareholders with a claim for secondary market fraud. Although the legislation has some similarities to the “fraud on the market” class action found in the United States, the laws have some important differences. This article compares securities class actions in Canada and the United States, highlighting the differences between the two regimes that are likely to have important strategic consequences for class action attorneys and issuers. The article also collects and analyzes data on the securities class actions that have been filed to date against Canadian issuers in both Canada …
London As Delaware?, Adam C. Pritchard
London As Delaware?, Adam C. Pritchard
Law & Economics Working Papers Archive: 2003-2009
Regulatory competition has long driven the path of corporate law in the federal system of the United States. Now, jurisdictional competition has spread to exchange listings. New York took an early lead in that competition in the 1990s, but has now been overtaken by London. Can London prevail in the competition for stock listings in the long term? This essay explores that question through the insights offered by Delaware’s dominance in the market for corporate listings. Delaware has prevailed by offering corporate directors a predictable body of that credibly shields directors from the vagaries of political backlash in times of …
Do Individual Investors Affect Share Price Accuracy? Some Preliminary Evidence, Alicia Davis Evans
Do Individual Investors Affect Share Price Accuracy? Some Preliminary Evidence, Alicia Davis Evans
Law & Economics Working Papers Archive: 2003-2009
A common belief is that individual investors are noise traders that distort stock prices. Because accurate share prices are important for economic functioning, the market effect of retail investors has significant regulatory implications. This paper, employing a new NYSE retail trading data set and the R2 metric of share price informedness, contributes to the debate by demonstrating that as the proportion of trading by individual investors increases, the R2 of firms decreases. Adherents of the R2 methodology hold that lower R2's imply more accurate stock prices. The results of an instrumental variable estimation suggest that this relationship is a causal …
Attorneys As Arbitrators, Stephen Choi, Jill Fisch, Adam C. Pritchard
Attorneys As Arbitrators, Stephen Choi, Jill Fisch, Adam C. Pritchard
Law & Economics Working Papers Archive: 2003-2009
We study the role of attorneys as arbitrators in securities arbitration conducted by the National Association of Securities Dealers (NASD, n/k/a FINRA), using a dataset of 422 randomly selected arbitrators and their 6724 arbitration awards from 1992 to 2006. We find that arbitrators who also represent brokerage firms or brokers in other arbitrations award significantly less compensation to investor-claimants than other arbitrators. We find no significant effect for attorney-arbitrators who represent investors or both investors and brokerage firms. The relation between representing brokerage firms and arbitration awards remains significant even when we control for political outlook. We report that ideology …