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Research Papers

Our experts have published extensively in peer-reviewed journals. Pre-publication versions of these papers plus other working papers are available below.

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Securities Class Action Lawsuits

Investors sometimes sue publicly traded companies, executives, accountants and underwriters alleging that important information concerning the companies was omitted or misrepresented thereby causing the investors to pay too much for the companies' securities. Financial economists assist fact finders in determining whether allegedly omitted or misrepresented information was truly important or 'material.' This is done with the use of event studies or by reference to published scientific literature. Financial economists help the parties reach settlements by estimating alleged damages. Alleged damages depend on the amount by which a company's stock price was allegedly inflated and the number of shares that were bought at fraudulently inflated prices. In these slides, SLCG outlines the major issues in estimating alleged damages in securities class action lawsuits.

The Suitability of Exercise and Hold

Hundreds of lawsuits are currently working their way through the courts and arbitration panels over a strategy referred to as exercise and hold. The advice to exercise employee stock options and hold the acquired stock is essentially advice to acquire and maintain a concentrated position. As such, the advice to exercise and hold can be evaluated within the familiar suitability framework.

Churning

In this paper, Dr. McCann improves upon traditional indicators of churning and demonstrates that, properly calculated, the trading costs estimate of damages closely parallels the well-managed theory, or benchmark portfolio, estimate of damages.

Bid-Ask Spread, Sales Credits and Brokers' Compensation

In this working paper, co-authored with Richard Himelrick, Esq., Dr. McCann explains the role of market makers and the provision of sales credits as a basis for brokers' compensation.

McCann On Trading Models

Stock trading models are used by economists to estimate damages in securities class action lawsuits. In this note, we explain the three types of models used by plaintiffs' and defendants' experts.

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