Damages for Breach of Duty in Corporate Disclosure

Urs Schweizer
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Urs Schweizer: University of Bonn

Review of Law & Economics, 2011, vol. 7, issue 2, pages 2

Abstract:

Information provided by an agent affects the prices at which equity transactions take place. The agent may breach his duty either by spending too little effort at investigating relevant matters or by unduly manipulating the obtained information. As a consequence of such breach of duty, market participants may suffer from losses. Legal systems provide a rather disparate array of remedies without providing a coherent theory that would support the design of these remedies. The present paper proposes a general principle according to which courts may award expectation damages and it identifies sufficient conditions under which such damages would generate incentives for the agent to investigate with due care and to duly disclose the information.

Keywords: corporate disclosure; breach of duty; damages; incentives (search for similar items in EconPapers)
JEL-codes: K13 K12 D62 (search for similar items in EconPapers)
Date: 2011
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