English
 
Help Privacy Policy Disclaimer
  Advanced SearchBrowse

Item

ITEM ACTIONSEXPORT

Released

Paper

No Derivative Shareholder Suits in Europe – A Model of Percentage Limits and Collusion

MPS-Authors
/persons/resource/persons183124

Grechenig,  Kristoffel
Max Planck Institute for Research on Collective Goods, Max Planck Society;

Fulltext (restricted access)
There are currently no full texts shared for your IP range.
Fulltext (public)
There are no public fulltexts stored in PuRe
Supplementary Material (public)
There is no public supplementary material available
Citation

Grechenig, K., & Sekyra, M. (2010). No Derivative Shareholder Suits in Europe – A Model of Percentage Limits and Collusion.


Cite as: https://hdl.handle.net/11858/00-001M-0000-0028-6E44-6
Abstract
We address one of the cardinal puzzles of European corporate law: the lack of derivate share-holder suits. We explain this phenomenon on the basis of percentage limits which require share-holders 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.