Abstract. Securities class actions are considered to be a prominent tool to create a deterrence impact on companies whose wrongdoing has affected their stock prices. Inspired from fraud-market theory, securities class actions do protect small and large investors. It becomes critically important to understand the factors that could impact the outcomes in these lawsuits. This research aims to examine the determinants of settlements specially in securities class actions. The study utilizes a hand-collected data set of 1,241 cases, to analyses the impact of variables that are related to case merit, defendant strength and judicial proceedings. The findings reveal that meritorious lawsuits have higher chances of resulting in a settlement outcome. On the other hand, the market valuation of the defending firm reduces these chances. Judicial experience has a positive influence on facilitating settlements. These conclusions contribute to a better understanding of the factors influencing the settlement outcome and can help in promoting informed policy decisions to stimulate settlement outcomes in such class actions.

Keywords : Event Study, Settlement, Class actions, Securities fraud, Logistic Regression JEL codes : D53, G14, K22, K41

Lien vers HAL : https://hal.science/hal-05045412v1/document