Shareholder litigation and changes in disclosure behavior
AbstractWe examine changes in the disclosure behavior of firms involved in 827 disclosure-related class-action securities litigation cases filed between 1996 and 2005. We find no evidence that the firms in our sample respond to the litigation event by increasing or improving their disclosures to investors. Rather, we find consistent evidence that firms reduce the level of information provided post-litigation. Our results suggest that the litigation process encourages firms to decrease the provision of disclosures for which they may later be held accountable, despite the increased protections afforded by the Private Securities Litigation Reform Act of 1995.
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Bibliographic InfoArticle provided by Elsevier in its journal Journal of Accounting and Economics.
Volume (Year): 47 (2009)
Issue (Month): 1-2 (March)
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Web page: http://www.elsevier.com/locate/jae
Litigation risk Conference calls Management forecasts Earnings surprises Forecast properties;
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Finance and Economics Discussion Series
2011-12, Board of Governors of the Federal Reserve System (U.S.).
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