Quantifying Shareholder Losses from Continuous Disclosure Breaches: An Assessment of US Court Methods
University of Sydney; Financial Research Network (FIRN)
Daniel Brian Maroney
University of Sydney - Discipline of Finance
Journal of Applied Research in Accounting and Finance (JARAF), Vol. 8, No. 2, 2013
In US securities fraud cases, the Market Model-based event study has been a required component of any calculation of damages. However, in Australia, there is no authority regarding the appropriate method for estimating damages for breaches of continuous disclosure provisions, a branch of securities fraud, by publicly-listed companies. This paper assesses four major methods for determining damages applied in US securities fraud matters to actual Australian breaches of continuous disclosure. Given the widespread acceptance and strength of the theoretical underpinnings of the Market Model, any divergence in damages estimation by the other methods supports the deference that should be shown to the Market Model in quantifying damages in securities fraud matters. The results highlight that the Market Model estimates loss differently from the other methods to a highly significant degree, thereby supporting the appropriateness of the Market Model in both US and Australian securities fraud matters.
Number of Pages in PDF File: 27
Keywords: Accounting, Finance
JEL Classification: M40, M41
Date posted: January 9, 2014
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