Posts Tagged ‘corporate governance’

I have to put in a little pitch for one of the many worthy blogs nominated for the ABA Journal’s Blawg 100 awards this year.  I must admit my bias.   TheRacetotheBottom.org is edited by one of my favorite law school professors, Jay Brown, and the contributors are students and other faculty from my alma mater, the University of Denver Sturm College of Law.  However, it is also one of the best sources on the Web for information on corporate governance and securities class actions.  You can vote for TheRacetotheBottom and many other fine law blogs on the ABA Journal’s Blawg 100 page.

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I recently came across this interesting August 20, 2008, article authored by Nicholas Rummell at FinancialWeek.com, discussing a report issued that same day by the Corporate Library finding that CEO compensation tended to increase rather than decrease following a securities class action against the company.  The report appears to focus on compensation decisions following the mere filing of the lawsuit, as opposed to its resolution.  Also, as the Financial Week article points out, the report does not take into account cases filed after the stock option backdating scandal broke.

It is difficult to draw any clear conclusions from the article without reading the report itself (which is available for purchase at the Corporate Library website), but the implication seems to be that the financial impact of securities class action lawsuits is being borne by shareholders rather than the executives.  It would be interesting to see if the same trend holds true after there has been a large payout due to a verdict or settlement.

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