Shareholder Wealth Maximization and Securities Fraud
19 Pages Posted: 28 Sep 2023 Last revised: 3 Oct 2023
Date Written: September 27, 2023
Government enforcers are often criticized for not identifying and prosecuting individual executives responsible for corporate misconduct. This essay contends that the failure to bring enforcement actions against individuals can be partly explained by the difficulty of disentangling individual and corporate incentives for wrongful corporate acts. For example, in securities fraud cases, it can be challenging to determine whether corporate managers issued a materially misleading disclosure to further shareholder wealth or to enrich themselves. Enforcers are less likely to pursue individuals in the corporate context without a clear agency costs story.
Keywords: Securities, Securities Regulation, Securities Law, Securities Fraud, Corporate Law, Corporate Governance, Corporate Purpose, Corporate Responsibility, Shareholder Wealth Maximization
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