A recent New York Times article highlighted large asset managers that are becoming more active on corporate governance issues. The increase in their level of activity raises questions related to the potential impacts of these large institutional holders becoming more active in securities litigation. We examine a few illustrative examples to draw inferences regarding the implications for settlement costs if large institutions decide to opt out of class action litigations more frequently.
Market expectations and security prices
Market participants use the information available to them at any given time to form expectations of the future performance of a company and a company’s stock...