1.2 What this book is (not) about

Traditionally, directors’ liability legislation has been argued to serve two main functions: allocation of damage and control of behaviour.1 The first function involves the question of who (the director or the injured party) will pay (for what part of) the damage.2 Or more broadly, who will bear the financial risks of directors’ actions – the director, the company, third parties of the company or insurers, in full or part?3 Indisputably, this is an important question with lots of money involved. However, it was not the driver of this book. The driver of this book is the second function of directors’ liability legislation, the control of directors’ behaviour. In studying the potential of directors’ liability legislation to control directors’ behaviour, I went beyond the traditional legal view of directors’ liability as predominantly regulative and coercive. This allowed me to understand directors’ liability as an intricate system of sanction and protection and to consider the explicit and latent characteristics of directors’ liability. The motivational basis of this book was discussed in paragraph 1.1.

I have mentioned that I have divided my research into three blocks. This book therefore consists of three pieces of research. Each piece of research is devoted to a specific research issue and can be read separately (Chapters 2, 3 and 4). Although I discuss the underlying research methodology in each of the chapters, it is important to note here that this book is in large a product of legal and empirical research. This has the important implication that while I studied positive law, legal doctrines and legal literature, and recognised the virtues that apply to traditional legal research, they were not the primer on which I based my findings nor the main method through which I reached my conclusions and propositions. Law in action and qualitative and quantitative empirical legal methods have provided me with important resources. Specifically, directors’ perceptions and attitudes towards directors’ liability risks (prevalent in Chapter 2) and the courts’ perceptions and assumptions as represented in court decisions involving directors’ liability litigation (prevalent in Chapters 3 and 4).