Abstract
This paper analyzes the inverse window dressing of managers in their management buyouts (MBOs) and the claims of damages for compensation filed by the small shareholders against the manager.
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Notes
- 1.
In the aspect of corporate accounting point of view, “dressing” refers to the value embroidery reported by managers, more than the real, and “inverse dressing” is in contrary sense.
- 2.
The origin of FIEA had been enacted in 2007.
- 3.
For example, see Burkart and Panunzi (2006)
- 4.
While it is important to consider the type that the stock price would be, in this paper, we focus on damage claim action after sale.
- 5.
If there is only a few small shareholder, the cost of litigation would be very high, and there is a possibility of abandoning the lawsuit. However, here, we are considering a class action lawsuit by small shareholders.
- 6.
Here, we assume that the cost of litigation is 0 for the simplification of the model. Of course, the magnitude of litigation costs is an important issue, and the results of the analysis can change.
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Nozaki, R. (2017). Managers’ Window Dressing and Liability for Damages to a Stock Sales in Management Buyouts. In: Naito, T., Lee, W., Ouchida, Y. (eds) Applied Approaches to Societal Institutions and Economics. New Frontiers in Regional Science: Asian Perspectives, vol 18. Springer, Singapore. https://doi.org/10.1007/978-981-10-5663-5_6
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DOI: https://doi.org/10.1007/978-981-10-5663-5_6
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