| Publication Type | | Preprints |
| Author | | Kristoffel Grechenig, Michael Sekyra |
| Year of Publication | | 2010 |
| Issue | | 2010/15 |
| Abstract | | We address one of the cardinal puzzles of European corporate law: the lack of derivate share-holder suits. We explain this phenomenon on the basis of percentage limits which require share-holders to hold a minimum amount of shares in order to bring a lawsuit. We show that, under this legal regime, managers will collude with large shareholders by means of settlements or bribes that impose a negative externality on small shareholders. Contrary to conventional agency models, we find that large shareholders do not monitor the management; as a consequence, there is no free riding opportunity for small shareholders. |
| Publisher | | Max Planck Institute for Research on Collective Goods |
| Place Published | | Bonn |
| Export | | Tagged BibTex XML |
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| Published in: | | International Review of Law and Economics (IRLE), vol. 31, no. 1, pp. 16-20, 2011 |
| Supplementary Material | | |
| Keywords | | Collusion, Derivative Shareholder Suits, Percentage Limits, Monitoring, Free Riding |
| JEL-Codes | | K22, K42, G30 |
