Strategic Analysis of Securities Litigation against Independent Auditors

摘要: It has been claimed that the accounting profession faces a serious litigation crisis, largely attributable to frivolous class‐action lawsuits allege securities fraud. In response recent calls for research on litigation, this paper develops and analyses game‐theoretic model of settlement under present institutional arrangements in United States. Two questions are examined. First, what factors explain outcomes against independent auditors U.S.? Second, (if any) strategies exist firms might employ deter unwarranted coerced settlements, other objectionable outcomes? Our results indicate (1) settlements predominant outcome game because both sides generally receive higher expected payoffs from than trials; (2) prevalence protracted pre‐trial is primarily att...