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An Economic Analysis of Australian Damage Remedies for Misleading Prospectuses: Trade Practices Act vs. Corporations Law

Author

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  • Pitchford, R.

Abstract

Laws that address damages caused by deceptive or misleading prospectuses impact on the incentive issuers face to create such prospectuses, and hence impact on the level of investment. In Australia, it has been proposed to shift from a strict liability regime under s52 of the Trade Practices Act, to a due diligence regime under the Corporations Law. I argue that due diligence is inferior to strict liability for large firms, but in some cases may be preferred to strict liability for small firms.

Suggested Citation

  • Pitchford, R., 1997. "An Economic Analysis of Australian Damage Remedies for Misleading Prospectuses: Trade Practices Act vs. Corporations Law," CEPR Discussion Papers 377, Centre for Economic Policy Research, Research School of Economics, Australian National University.
    • Handle: RePEc:auu:dpaper:377
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    More about this item

    Keywords

    LAW ; INVESTMENTS ; CORPORATIONS;
    All these keywords.

    JEL classification:

    • K13 - Law and Economics - - Basic Areas of Law - - - Tort Law and Product Liability; Forensic Economics
    • K22 - Law and Economics - - Regulation and Business Law - - - Business and Securities Law

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