EconPapers    
Economics at your fingertips  
 

No derivative shareholder suits in Europe: A model of percentage limits and collusion

Kristoffel Grechenig and Michael Sekyra

International Review of Law and Economics, 2011, vol. 31, issue 1, 16-20

Abstract: We address one of the cardinal puzzles of European corporate law: the lack of derivate shareholder suits. We explain this phenomenon on the basis of percentage limits which require shareholders to hold a minimum amount of shares in order to bring a lawsuit. We show that, under this legal regime, managers will collude with large shareholders by means of settlements or bribes that impose a negative externality on small shareholders. Contrary to conventional agency models, we find that large shareholders do not monitor the management; as a consequence, there is no free riding opportunity for small shareholders.

Keywords: Derivative; shareholder; suits; Percentage; limits; Collusion; Monitoring; Free; riding (search for similar items in EconPapers)
Date: 2011
References: View references in EconPapers View complete reference list from CitEc
Citations Track citations by RSS feed

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0144-8188(10)00044-X
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:irlaec:v:31:y:2011:i:1:p:16-20

Access Statistics for this article

International Review of Law and Economics is currently edited by C. Ott, A. W. Katz and H-B. Schäfer

More articles in International Review of Law and Economics from Elsevier
Series data maintained by Dana Niculescu ().

 
Page updated 2018-01-24
Handle: RePEc:eee:irlaec:v:31:y:2011:i:1:p:16-20