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Counterfactual Keys to Causation and Damages in Shareholder Class Actions


Frederick C. Dunbar


U.S. Securities and Exchange Commission

Arun Sen


NERA Economic Consulting

January 15, 2009

Wisconsin Law Review, Vol. 2009, No. 2, 2009

Abstract:     
Introducing quantitative rigor into the legal process has been proposed to reduce error and uncertainty in litigation. One area of law that would seem to be a candidate for such formalism would be proving causation. Yet most legal scholars balk at the idea that the legal principles of causation are based on anything as precise as, say, scientific causation. We believe that counterfactual analysis, a relatively recent trend in the philosophy of causation that is being applied in the social sciences, has a role in understanding causation in at least one important area of the law-shareholder class actions. The increasingly strict standards imposed by the Supreme Court over the past twenty years, culminating in the Dura decision, can be understood in the context of counterfactual analysis establishing loss causation. This approach then has important implications for estimating damages in shareholder class actions.

Number of Pages in PDF File: 38

Keywords: securities, causation, event studies, damages, materiality, class actions

JEL Classification: K22

working papers series


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Date posted: February 21, 2009  

Suggested Citation

Dunbar, Frederick C. and Sen, Arun, Counterfactual Keys to Causation and Damages in Shareholder Class Actions (January 15, 2009). Wisconsin Law Review, Vol. 2009, No. 2, 2009. Available at SSRN: http://ssrn.com/abstract=1333900 or http://dx.doi.org/10.2139/ssrn.1333900

Contact Information

Frederick C. Dunbar (Contact Author)
U.S. Securities and Exchange Commission ( email )
100 F Street, NE
Washington, DC 20549
United States
202-551-3615 (Phone)
Arun Sen
NERA Economic Consulting ( email )
United States
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