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Damages for Breach of Duty in Corporate Disclosure

Author

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  • Schweizer Urs

    (University of Bonn)

Abstract

Information provided by an agent affects the prices at which equity transactions take place. The agent may breach his duty either by spending too little effort at investigating relevant matters or by unduly manipulating the obtained information. As a consequence of such breach of duty, market participants may suffer from losses. Legal systems provide a rather disparate array of remedies without providing a coherent theory that would support the design of these remedies. The present paper proposes a general principle according to which courts may award expectation damages and it identifies sufficient conditions under which such damages would generate incentives for the agent to investigate with due care and to duly disclose the information.

Suggested Citation

  • Schweizer Urs, 2011. "Damages for Breach of Duty in Corporate Disclosure," Review of Law & Economics, De Gruyter, vol. 7(2), pages 355-376, December.
    • Handle: RePEc:bpj:rlecon:v:7:y:2011:i:2:n:2
    DOI: 10.2202/1555-5879.1518
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    References listed on IDEAS

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    1. Shavell, Steven, 1985. "Uncertainty over Causation and the Determination of Civil Liability," Journal of Law and Economics, University of Chicago Press, vol. 28(3), pages 587-609, October.
    2. Hirshleifer, Jack, 1971. "The Private and Social Value of Information and the Reward to Inventive Activity," American Economic Review, American Economic Association, vol. 61(4), pages 561-574, September.
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