Cutting Class Action Agency Costs: Lessons from the Public Company

77 Pages Posted: 9 Oct 2019

See all articles by Amanda M. Rose

Amanda M. Rose

Vanderbilt University - Law School

Multiple version iconThere are 2 versions of this paper

Date Written: September 27, 2019

Abstract

The agency relationship between class counsel and class members in Rule 23(b)(3) class actions is similar to that between executives and shareholders in U.S. public companies. This similarity has often been noted in class action literature, but until this Article no attempt has been made to systematically compare the approaches taken in these two settings to reduce agency costs. Class action scholars have downplayed the importance of the public company analogy because public companies are subject to market discipline and class actions are not. But this is precisely why the analogy is useful: because public companies are subject to market discipline, the tools they utilize to reduce agency costs are more likely to be efficient. This Article looks to those tools as inspiration for class action reform, proposing several novel ways to improve current practice.

Keywords: class actions, agency costs, Rule 23, corporate law, public companies, corporate governance

JEL Classification: K20, K22, K40, K41

Suggested Citation

Rose, Amanda M., Cutting Class Action Agency Costs: Lessons from the Public Company (September 27, 2019). Available at SSRN: https://ssrn.com/abstract=3460585 or http://dx.doi.org/10.2139/ssrn.3460585

Amanda M. Rose (Contact Author)

Vanderbilt University - Law School ( email )

131 21st Avenue South
Nashville, TN 37203-1181
United States

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