Saturday, October 18, 2008

Financial Crisis Provides Fertile Ground for Boom in Lawsuits - NYTimes.com

Gee, who could have seen this coming? ;)

Financial Crisis Provides Fertile Ground for Boom in Lawsuits - NYTimes.com:
"Accusations of executive excess, accounting fraud and lack of disclosure are far more credible now, since bad bets on real estate and securities linked to home loans have caused some of the biggest and most prestigious financial firms in the country — Lehman Brothers, the American International Group, Fannie Mae, Freddie Mac — to collapse, sell parts of themselves at fire-sale prices or suffer outright government takeovers. A legal argument rarely used in investor lawsuits is tempting: res ipsa loquitur, or the thing speaks for itself.
and later
"...One factor contributing to litigation is the rapid availability of information about corporate mistakes and losses...."
Interesting. The last quote gives us yet another reason why managers often have conflicting incentives when it comes to transparency. Does anyone know of a study that examines this? Maybe lawsuits or CEO turnover as a function of information transparency? If so please email me. if not and want to write one, please email me. :)

2 comments:

kiko said...

Nice to see you.
I hope you'll have a good luck on your work.

Mark Ramchandaran said...

Hi, I was reading through your posts, you might be able to get some more information here sternfinance.blogspot.com