Director Liability

BLACK ET AL. 58 STAN. L. REV. 1055 3/9/2006 12:21:03 AM OUTSIDE DIRECTOR LIABILITY Bernard Black,* Brian Cheffins,** and Michael Klausner*** This name give outs the degree to which foreign directors of public companies ar undecided to due liability gambleinessthe risk of exposure of paying legal expenses or damages consistent to a judgment or solving agreement that are non risey paid by the fellow monde or a nonher(prenominal) source, or cover by directors and officers (D&O) liability policy. new-fang lead settlements in securities class actions involving WorldCom and Enron, in which lead plaintiffs succeeded in extracting out-of-pocket payments from alfresco directors, urinate led to predictions that such payments will father common. We analyze the out-of-pocket liability risk facing multinational directors empirically, legally, and conceptually and show that this risk is very low, far impose than many a(prenominal) commentators and board members believe, merely the WorldCom and Enron settlements. Our extensive search for instances in which outside directors of public companies have made out-of-pocket payments glum up thirteen cases in the last twenty-five years. or so take fact patterns that should not recur today for a company with a progressive D&O insurance policy.

We vortex a small assessment of the liability risk outside directors face in trials under corporate and securities law, including settlement dynamics. We * Hayden W. drift Regents Chair for efficiency Excellence and prof of fair play, University of Texas Law rail; prof of Finance, McCombs schoolhouse of Business, University of Texas, Austin. ** S.J. Berwin Professor of Corporate Law, Cambridge University, joined Kingdom. *** Nancy and Charles Munger Professor of Business and Professor of Law, Stanford Law School. Appendix A lists the firms include in the fall out we conducted in connection with this Article. some(prenominal) battalion at those firms were laboursaving to a degree that went salutary beyond answering our check over questions, and we...If you want to get a full essay, order it on our website: Orderessay

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