History of Law and Economics
In: Preprints of the Max Planck Institute for Research on Collective Goods 2014,5
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In: Preprints of the Max Planck Institute for Research on Collective Goods 2014,5
In: Forthcoming 2024
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In: European company and financial law review: ECFR, Band 19, Heft 1, S. 3-39
ISSN: 1613-2556
Jurisdictions around the world have developed different mechanisms to balance the need to enforce corporate law with the problem of non-meritorious litigation when derivative suits can be brought bring easily. One instrument to channel shareholder litigation is preliminary procedures, which typically constitute a screening stage before fact-finding. These have been adopted in several jurisdictions in recent years. This article argues that in jurisdictions applying the "loser pays" rule, preliminary procedures can serve as cutoff points for potential plaintiffs' litigation cost risk, which often blunts incentives to litigate. To make preliminary procedures an effective instrument this article proposes two elements of institutional design. First, the risk of paying litigation costs should initially be limited to the preliminary procedure. Second, at the preliminary stage, shareholders should not be required to provide evidence about the merits of the suit or whether the company would benefit from it. Instead, as in the US, the emphasis of the preliminary stage should be on conflicts of interest of directors that make it unlikely that they bring such a suit themselves. Such a system would permit courts to screen our abusive lawsuits at an early stage while at the same time reducing incentive problems that have long plagued shareholder litigation.
In: RESEARCH HANDBOOK ON CORPORATE LIABILITY. Edward Elgar Publishing (Martin Petrin & Christian Witting, eds. 2022, Forthcoming)
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In: Fordham Law Legal Studies Research Paper No. 4020333
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In: Forthcoming in European Company and Financial Law Review (2022)
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In: Rabels Zeitschrift für ausländisches und internationales Privatrecht: The Rabel journal of comparative and international private law, Band 83, Heft 2, S. 461
ISSN: 1868-7059
In: Research Handbook on Shareholder Litigation by Jessica Erickson, Sean Griffith, David Webber and Verity Winship, eds., 2018
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In: Forthcoming in Handbook on the Economics of Social Responsibility: Individuals, Corporations and Institutions (Lorenzo Sacconi and Giacomo Degli Antoni eds.)
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Working paper
In: Understanding the Company: Corporate Governance and Theory (Barnali Choudhury & Martin Petrin eds., Cambridge University Press, 2017)
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In: in: Fernanda Nicola & Bill Davies, EU Law Stories (Cambridge University Press 2017)
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In: Forthcoming in Company Law and CSR: New Legal and Economic Challenges (Ivan Tchotourian ed., Bruylant 2014)
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In: European Business Organization Law Review, Band 14, S. 497-533
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In: Zeitschrift für öffentliches Recht: ZÖR = Journal of public law, Band 67, Heft 4, S. 819-831
ISSN: 1613-7663
In: Fordham Law Legal Studies Research Paper No. 2079607
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Working paper