Abstract

http://ssrn.com/abstract=1401386
 
 

Citations (1)



 
 

Footnotes (199)



 


 



Shareholder Compensation as Dividend


James J. Park



May 8, 2009

Michigan Law Review, Vol. 108
Brooklyn Law School, Legal Studies Paper No. 148

Abstract:     
This Article questions the prevailing view that securities fraud actions suffer from a circularity problem. Because shareholder plaintiffs are owners of the defendant corporation, it is commonly argued that shareholder compensation is a payment from shareholders to themselves with substantial transaction costs in the form of attorney fees. But shareholder compensation is no more circular than a dividend, which is a cash payment to shareholders from the company they own with substantial transaction costs in the form of taxes. In fact, shareholder compensation is less circular than a dividend because it is a transfer to shareholders who purchased stock when the price was inflated by fraud from those who did not. Shareholder compensation serves an important loss spreading function that is facilitated by the insurance market. Shareholder compensation may also capture some of the benefits of paying dividends, such as signaling and reducing agency costs, though it may do so more effectively if companies could resolve securities fraud actions by paying a preemptive dividend.

Number of Pages in PDF File: 51

Keywords: Securities, 10b-5, circularity, securities fraud, securities regulation, dividends, dividend puzzle, agency costs, signaling

Accepted Paper Series





Download This Paper

Date posted: May 9, 2009 ; Last revised: June 22, 2010

Suggested Citation

Park, James J., Shareholder Compensation as Dividend (May 8, 2009). Michigan Law Review, Vol. 108; Brooklyn Law School, Legal Studies Paper No. 148. Available at SSRN: http://ssrn.com/abstract=1401386

Contact Information

No contact information is available for James J. Park
Feedback to SSRN


Paper statistics
Abstract Views: 895
Downloads: 200
Download Rank: 90,506
Citations:  1
Footnotes:  199

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo4 in 0.281 seconds