An Analysis of Settlement and Merit Under Federal Securities Law: What Will Be the Effect of the Reform of 1995?

摘要: In this paper we develop a game-theoretic model to (i) investigate settlement incentives under two different legal regimes: the Securities Exchange Act of 1934 and Private Litigation Reform 1995, (ii) assess correspondence between settlements merits for these regimes. We negotiations in game with three players; plaintiff defendants (a firm/manager an auditor). find that negotiation process ends rather than litigation both However, regimes elicit strategies on part which, turn, precipitates settlement/merits disparities. 1995 Reform, equilibrium reflect underlying auditor more closely broad range parameters, although not all parameter levels.