Journal article
Class-Action Privileges and Contingent Legal Fees: Investor and Lawyer Incentives to Litigate and the Effect on Audit Quality
Journal of accounting and public policy, Vol.4(3), pp.175-200
01/01/1985
DOI: 10.1016/0278-4254(85)90019-5
Abstract
An attempt is made to address the debate surrounding class-action privileges and contingent legal fees by presenting an economic analysis of an auditing environment. This is done by extending the work of Simon (1981) to develop an equilibrium model of representative investor, lawyer, and audit firm behavior under: 1. class-action privileges and contingent legal fees, and 2. no class-action privileges and fixed legal fees. While the equilibrium model is a single-period or static model, there is no evidence to indicate that it could not be generalized into a multiperiod setting. The results indicate that, when the representative investor owns a small share of a firm, the investor and lawyer will more often litigate with class-action privileges and contingent legal fees than will the investor with no privileges and fixed fees. In addition, it is indicated that, under class-action privileges with contingent legal fees, the representative investor is generally the pivotal individual.
Details
- Title: Subtitle
- Class-Action Privileges and Contingent Legal Fees: Investor and Lawyer Incentives to Litigate and the Effect on Audit Quality
- Creators
- Douglas DeJong
- Resource Type
- Journal article
- Publication Details
- Journal of accounting and public policy, Vol.4(3), pp.175-200
- DOI
- 10.1016/0278-4254(85)90019-5
- ISSN
- 0278-4254
- eISSN
- 1873-2070
- Publisher
- Elsevier Sequoia S.A
- Language
- English
- Date published
- 01/01/1985
- Academic Unit
- Accounting
- Record Identifier
- 9984962886502771
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