Director’s liability and investor protection: a law and finance perspective

This article conducts an analysis of director’s liability in listed firms using modern finance theory. The paper describes how the use of special general clauses in Danish law regulates director’s liability. It is shown how risk and return combinations may assist in determining whether management has violated the business judgment rule. The analysis shows that this legal doctrine is optimal from an economic perspective. The article introduces the concept of “temporal relatively of the shareholder equality principle” which can be used to determine whether the interests of minority shareholders have been set aside. It is shown that the principle of shareholder equality must be subjected to both an ex ante, as well as an ex post assessment. Moreover, courts should be reluctant to interfere in situations where there has been an unequal distribution of gain (or loss) ex post. The theoretical arguments are illustrated by analyzing a leading Danish court case that involved the squeeze out of minority shareholders in the Danish telecom company. The paper also analyzes the incentive effects of derivate suits and suits commenced by individual shareholders. It is shown that the former creates a free rider problem whereas in the latter situation, shareholders are not fully able to internalize their externalities.     

Pubertal Development Moderates the Importance of Environmental Influences on Depressive Symptoms in Adolescent Girls and Boys

Prevalence differences in depressive symptoms between the sexes typically emerge in adolescence, with symptoms more prevalent among girls. Some evidence suggests that variation in onset and progression of puberty might contribute to these differences. This study used a genetically informative, longitudinal (assessed at ages 12, 14, and 17) sample of Finnish adolescent twins (N = 1214, 51.6% female) to test whether etiological influences on depressive symptoms differ as a function of pubertal status. These tests were conducted separately by sex, and explored longitudinal relationships. Results indicated that pubertal development moderates environmental influences on depressive symptoms. These factors are more important on age 14 depressive symptoms among more developed girls relative to their less developed peers, but decrease in influence on age 17 depressive symptoms. The same effects are observed in boys, but are delayed, paralleling the delay in pubertal development in boys compared to girls. Thus, the importance of environmental influences on depressive symptoms during adolescence changes as a function of pubertal development, and the timing of this effect differs across the sexes.