Internal and External Discipline Following Securities Class Actions

41 Pages Posted: 18 Jul 2011 Last revised: 27 Aug 2012

See all articles by Mark Humphery-Jenner

Mark Humphery-Jenner

UNSW Business School; Financial Research Network (FIRN)

Date Written: 2012

Abstract

Companies are sometimes accused of misleading the market. The SEC can punish this with enforcement actions. Alternatively, shareholders can seek redress through a shareholder class action (SCA). Thus, using a sample of 416 securities class actions, this paper shows that SCAs are a catalyst to promote disciplinary takeovers, CEO turnover and pay-cuts, and harm CEOs' future job-prospects. This suggests that even if the law governing SCAs is sub-optimal, they can still induce internal and external discipline.

Keywords: securities class actions, securities law, governance, ethics, takeovers, managerial turnover, fraud, disclosure

JEL Classification: G28, G34, G38, K22, K41

Suggested Citation

Humphery-Jenner, Mark, Internal and External Discipline Following Securities Class Actions (2012). Journal of Financial Intermediation, Vol. 21, No. 1, 2012, Available at SSRN: https://ssrn.com/abstract=1886127

Mark Humphery-Jenner (Contact Author)

UNSW Business School ( email )

UNSW Business School
High St
Sydney, NSW 2052
Australia

Financial Research Network (FIRN)

C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia

HOME PAGE: http://www.firn.org.au

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