Overlitigating Corporate Fraud: An Empirical Analysis

Jessica Erickson

University of Richmond School of Law

March 9, 2011

Iowa Law Review, Vol. 97, 2011

Corporate law leaves no stone unturned when it comes to litigating corporate fraud. The legal system has developed a remarkable array of litigation options – shareholder derivative suits, securities class actions, SEC enforcement actions, even criminal prosecutions – all aimed at preventing the next corporate scandal. Scholars have long assumed that these different lawsuits offer different avenues for deterring the masterminds of corporate fraud. Yet this assumption has gone untested in the legal literature. This Article aims to fill that gap through the first empirical examination of the broader world of corporate fraud litigation. Analyzing over 700 lawsuits, the study reveals that these lawsuits do not target different types of corporate wrongs. Instead these lawsuits too often target the same alleged misconduct, the same defendants, and the same corporate coffers. The data also demonstrate that certain types of lawsuits consistently outperform others, creating a litigation hierarchy within corporate law. These findings raise critical questions about traditional theories of deterrence, suggesting that more may not always be better when it comes to combating corporate fraud. The Article then brings these empirical insights to bear in developing a new framework for more targeted deterrence of corporate fraud.

Number of Pages in PDF File: 60

Keywords: corporate governance, shareholder litigation, shareholder derivative suits, securities class actions, corporate fraud

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Date posted: March 10, 2011 ; Last revised: September 25, 2013

Suggested Citation

Erickson, Jessica, Overlitigating Corporate Fraud: An Empirical Analysis (March 9, 2011). Iowa Law Review, Vol. 97, 2011. Available at SSRN: https://ssrn.com/abstract=1782239

Contact Information

Jessica Erickson (Contact Author)
University of Richmond School of Law ( email )
28 Westhampton Way
Richmond, VA 23173
United States
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