Choi et al. on Pay to Play in Securities Class Actions

The Price of Pay to Play in Securities Class Actions, by Stephen J. Choi, New York University - School of Law; Drew T. Johnson-Skinner, New York University School of Law; and Adam C. Pritchard, University of Michigan Law School, was recently posted on SSRN.  Here is the abstract:

This paper studies the effect of campaign contributions to lead plaintiffs — “pay to play’’ — on the level of attorneys’ fees in securities class actions. We find that state pension funds generally pay lower attorneys’ fees when they serve as lead plaintiffs in securities class actions than do individual investors serving in that capacity. This differential disappears, however, when we control for campaign contributions made to officials with influence over state pension funds. Thus, pay to play appears to increase agency costs borne by shareholders in securities class actions