The Harvard Law School Forum on Corporate Governance https://corpgov.law.harvard.edu The leading online blog in the fields of corporate governance and financial regulation. Mon, 10 Aug 2026 13:46:45 +0000 en-US hourly 1 https://wordpress.org/?v=6.5.9 https://corpgov.law.harvard.edu/wp-content/uploads/2024/02/cropped-photography-4-e1706898544564-1-32x32.png Lying and Getting Caught – The Harvard Law School Forum on Corporate Governance https://corpgov.law.harvard.edu 32 32 Lying and Getting Caught https://corpgov.law.harvard.edu/2010/04/30/lying-and-getting-caught/?utm_source=rss&utm_medium=rss&utm_campaign=lying-and-getting-caught https://corpgov.law.harvard.edu/2010/04/30/lying-and-getting-caught/#comments Fri, 30 Apr 2010 14:22:47 +0000 http://blogs.law.harvard.edu/corpgov/?p=8802?d=20150106104318EST Posted by R. Christopher Small, Co-editor, HLS Forum on Corporate Governance and Financial Regulation, on Friday, April 30, 2010
Editor's Note:

This paper comes to us from Lynn Bai, Assistant Professor Law at the University of Cincinnati, James Cox, Professor of Law at Duke University, and Randall Thomas, Professor of Law and Business at Vanderbilt University.

In our paper, Lying and Getting Caught: An Empirical Study of the Effect of Securities Class Action Settlements on Targeted Firms [Lynn Bai, James D. Cox & Randall S. Thomas, Lying and Getting Caught:  An Empirical Study of the Effect of Securities Class Action Settlements on Targeted Firms, 158 U. Pa. L. Rev. (forthcoming July 2010)], we examine the effect of securities class action settlements on targeted firms. Private suits have long been championed as a necessary mechanism not only to compensate investors for harms they suffer from financial frauds but also to enhance the deterrence of wrongdoing. But many critics have claimed that there a hidden dark side to the successful prosecution of a securities class action. In this paper, we shed light on these issues by examining whether the revelation of earlier misstatements, the initiation of private suit, and the payment of a substantial settlement, weaken the defendant firm so that the firm is permanently worse off as a consequence of the settlement.

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