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Motions for Lead Plaintiff in Securities Class Actions

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  • Stephen J. Choi

Abstract

Using a data set of securities class actions filed from 2003 to 2005, this study assesses the effect of the lead plaintiff presumption enacted as part of the Private Securities Litigation Reform Act of 1995 on agency costs of lead counsel for the class and class members. Examining the pretrial motions for lead plaintiff for each class action, the study reports evidence that characteristics of the selected lead plaintiff, including the amount of losses suffered, the presence of institutional investors, and the presence of institutions that are frequent movants for lead plaintiff status, are negatively correlated with attorney agency costs. The amount of competition in the lead plaintiff selection process and the formation of some (but not all) groups of lead plaintiffs are also negatively correlated with agency costs.

Suggested Citation

  • Stephen J. Choi, 2011. "Motions for Lead Plaintiff in Securities Class Actions," The Journal of Legal Studies, University of Chicago Press, vol. 40(1), pages 205-244.
  • Handle: RePEc:ucp:jlstud:doi:10.1086/658405
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    1. repec:bla:joares:v:32:y:1994:i:2:p:137-164 is not listed on IDEAS
    2. Heckman, James, 2013. "Sample selection bias as a specification error," Applied Econometrics, Publishing House "SINERGIA PRESS", vol. 31(3), pages 129-137.
    3. Stephen J. Choi, 2007. "Do the Merits Matter Less After the Private Securities Litigation Reform Act?," Journal of Law, Economics, and Organization, Oxford University Press, vol. 23(3), pages 598-626, October.
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