How Efficient is Sufficient: Applying the Concept of Market Efficiency in Litigation
The Business Lawyer, Vol. 74, Spring 2019
18 Pages Posted: 16 Jan 2020
Date Written: December 1, 2018
The concept of market efficiency has been adopted by courts in a variety of contexts. In reality, markets can never be perfectly efficient or inefficient, but exist somewhere in between depending on the facts and circumstances. Courts, therefore, face a problem in deciding how efficient is sufficient in any particular legal context. Because market prices incorporate the views of numerous market participants, courts have often been willing to presume that a market is efficient so long as the appropriate criteria are satisfied. However, those criteria are different for different types of cases, such as securities class actions, appraisal actions, and cram downs in bankruptcy.
Keywords: Market Efficiency, Litigation, Law and Economics
JEL Classification: G00, K00
Suggested Citation: Suggested Citation