Date: Wed. 19th February at 2PM
Title: Corporate Non-Disclosure Disputes: an equilibrium settlement discouraging withheld information
Abstract: How should a court resolve a shareholder-boardroom dispute following a stock price fall precipitated by the release of information, when shareholders suspect such information had previously been kept from them, rather than disclosed in a transparent timely manner. A continuous-time setting, in which firms select time-varying disclosure strategies that switch between different behaviours, tests how strategies and out-of-court settlements are affected by legal penalties. We propose a new method based on fair pricing for determining damages when evidence of non-disclosure is probabilistic and there is no prior news flow to the market. We derive a disclosure incentive factor which facilitates efficient out-of-court settlement.
Joint work with Miles Gietzmann (Bocconi).