PoW #42 Market impact and the role of litigation funders in securities class actions
Robert Faff
Emeritus Professor University of Queensland, Honorary Adjunct Professor of Finance at Bond University
In 1999, Australia introduced the legal option of security class actions (SCAs). The number of SCAs increased and since litigation funds were allowed in the market in 2006, the number of SCAs has increased even further. Australia has some of the most liberal class action rules in the world. At the same time, however, the Australian environment is different to other securities markets around the world because of its continuous market information disclosure regime, fewer information intermediaries per firm and relatively under-funded regulators. Dr. Victoria Clout, a lecturer at the University of New South Wales’ Business School is researching the economic impact in Australia of SCAs.
Victoria’s research interests are corporate governance, value relevance, valuation and capital markets and she has lectured at the University of Western Australia, Curtin University and the University of Queensland. Her research experience stands her in good stead for this work. ‘There has been very little scholarly research on the economic impact in Australia of SCAs,’ Victoria says. She continues, ‘Does the market reaction to the commencement of SCAs change over time, given the increase in frequency of SCAs and the increasing likelihood of settlement?’ ‘In this case,’ she explains, ‘the role of litigation funders in enabling private enforcement action in Australia warrants scrutiny.’
Together with her co-authors Dr David Tan in School of Aviation at UNSW and Professor Ellie Chapple at Queensland University of Technology, Victoria will examine data from Australian firms subject to class actions: around 40 litigated firms and 80 non-litigated firms, matched by size and by industry, covering the period 1999 to 2014. She plans to estimate the market impact using MathLab and to use STATA to estimate regressions with CAR as the dependent variable. The study will provide useful evidence on the market impact of SCAs in Australia, and the role of litigation funders in driving investor demand to privately fund a disclosure enforcement action. The research outcomes will therefore be of interest to policy makers, regulators and investors.
You can read the full research pitch – Appendix A90 in the online library of pitch examples – here (link) to see how all the elements of this study are captured in a succinct and clear form, aimed at an academic expert.
Interested readers are directed to the following related URL links and free resources:
- AACSB Innovations that Inspire listing:
https://www.aacsb.edu/about/awards/innovations-that-inspire/recipients/
- 70 second video about “pitching research” – an AACSB Innovation that Inspires:
https://www.youtube.com/watch?v=oe8hpIw9gUU
- Working paper “Pitching Research” available for free download from SSRN:
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2462059
- Online library of Pitch examples available for free download:
https://www.business.uq.edu.au/supplementary-material-pitching-research
- Online web portal for registered users to create their own research pitch (free registration):
- Related SSRN working papers:
- "The "Pitching Research" Concept: 2015, a Year in Review":
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2721528
- "Mapping “Pitching Research” Tasks into the RSD7 Framework: A Pedagogic Perspective"
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2724451
- “Pitching Research Evolution: An Illustrative Example on the Topic of 'Innovation and Financial Dependence'”
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2776959
- “Fantasy Pitching”