A recent paper addresses the problem of the “wide discretion” judges have in fashioning appraisal awards to dissenting shareholders based on opinions of valuation experts that are miles apart. “Judicial appraisal should not be a remedy for dissenting shareholders when a market exit or equivalent protection is otherwise available,” the authors write. Shareholders of publicly held companies often have an exit—they can sell easily. But shareholders of most closely held firms cannot do this. So, the authors explore “reinventing” the shareholders’ appraisal remedy. “While such reform would be costly to valuation litigation professionals, their loss would be more than offset by the benefit of such reforms to shareholders involved in future corporate transactions,” the authors say.

The paper is “The Exit Theory of Judicial Appraisal” and the authors are William J. Carney and Keith Sharfman, The paper appears in the Fordham Journal of Corporate & Financial Law.