Abstract

http://ssrn.com/abstract=1811068
 


 



Forward-Casting 10b-5 Damages: A Comparison to Other Methods


Allen Ferrell


Harvard Law School; European Corporate Governance Institute (ECGI)

Atanu Saha


Compass Lexecon

April 17, 2011

Harvard Law and Economics Discussion Paper
Harvard University John M. Olin Center for Law, Economics and Business Discussion Paper

Abstract:     
We propose in this paper the forward-casting method for estimating 10b-5 damages. We argue that this method compares favorably to two commonly used 10b-5 damage methods: constant dollar back-casting and the allocation method. Most importantly, both constant dollar back-casting and the allocation method, in contrast to forward-casting, fail to incorporate market expectations in estimating the stock price that would have obtained absent the alleged fraud. In the course of our discussion, we demonstrate how each one of these three methods work in practice using facts and data from an actual case. The choice of a damage method, as we document, can make a dramatic difference in estimated damages.

Number of Pages in PDF File: 35

Keywords: 10b-5 damages, securities damages, damages, securities lititgation

JEL Classification: G14, K22, K42

working papers series


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Date posted: April 19, 2011  

Suggested Citation

Ferrell, Allen and Saha, Atanu, Forward-Casting 10b-5 Damages: A Comparison to Other Methods (April 17, 2011). Harvard Law and Economics Discussion Paper; Harvard University John M. Olin Center for Law, Economics and Business Discussion Paper. Available at SSRN: http://ssrn.com/abstract=1811068 or http://dx.doi.org/10.2139/ssrn.1811068

Contact Information

Allen Ferrell (Contact Author)
Harvard Law School ( email )
Griswold 303 1525 Massachusetts Avenue
Cambridge, MA 02138
United States
(617) 495-8961 (Phone)
(617) 495-1110 (Fax)
European Corporate Governance Institute (ECGI)
c/o ECARES ULB CP 114
B-1050 Brussels
Belgium
HOME PAGE: http://www.ecgi.org
Atanu Saha
Compass Lexecon ( email )
New York, NY
United States
Feedback to SSRN


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