Market Prices vs. Fundamental Value: The Case for Using Discounted Cash Flow Analysis in Securities Class Actions.

This article proposes discounted cash flow (DCF) analysis as a substitute for, or complement to, event studies in securities class actions. In many contexts, DCF analysis would be more consistent with the principles articulated in the Supreme Court's decision in Goldman as well as the academic literature. DCF analysis also could avoid many problems associated with event studies and provide a more intuitive and precise framework for assessing both price impact and merits issues in securities class actions. The central idea is to shift from the analysis of market prices to the analysis of fundamental value. [ABSTRACT FROM AUTHOR]