The capital-market effects of introducing private rights of action in securities regulation: Evidence from the United Kingdom

Journal of Law & Economics 66(1)

57 Pages Posted: 29 Nov 2023

See all articles by Fernan Restrepo

Fernan Restrepo

University of California - Los Angeles

Date Written: November 8, 2023

Abstract

Securities class actions are among the most controversial topics in the corporate and securities law literature, but despite the significance of this topic, little is known about the impact of the introduction of the actions in the legal system. This paper contributes to filling this gap by examining the capital-market effects of the adoption of private rights of action (PRAs) in the United Kingdom – a jurisdiction that provides a unique empirical setting for the analysis. The results indicate that the introduction of the rights was associated with enhanced market liquidity and value. Although this finding is most directly relevant to the cost-benefit analysis of private litigation in the United Kingdom, it also suggests that eliminating PRAs in jurisdictions that have adopted them (a reform that has been proposed especially in the United States) may lead to lower liquidity and market value.

JEL Classification: G10, G15, G18, G23, G28, K22.

Suggested Citation

Restrepo, Fernan, The capital-market effects of introducing private rights of action in securities regulation: Evidence from the United Kingdom (November 8, 2023). Journal of Law & Economics 66(1), Available at SSRN: https://ssrn.com/abstract=4627365

Fernan Restrepo (Contact Author)

University of California - Los Angeles ( email )

385 Charles E Young Dr E
Los Angeles, CA 90095
United States
6502835952 (Phone)

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
87
Abstract Views
250
Rank
544,195
PlumX Metrics