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Shareholder litigation and changes in disclosure behavior

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  • Rogers, Jonathan L.
  • Van Buskirk, Andrew

Abstract

We 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.

Suggested Citation

  • Rogers, Jonathan L. & Van Buskirk, Andrew, 2009. "Shareholder litigation and changes in disclosure behavior," Journal of Accounting and Economics, Elsevier, vol. 47(1-2), pages 136-156, March.
  • Handle: RePEc:eee:jaecon:v:47:y:2009:i:1-2:p:136-156
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    References listed on IDEAS

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    9. Jonathan L. Rogers, 2008. "Disclosure Quality and Management Trading Incentives," Journal of Accounting Research, Wiley Blackwell, vol. 46(5), pages 1265-1296, December.
    10. Skinner, Douglas J., 1997. "Earnings disclosures and stockholder lawsuits," Journal of Accounting and Economics, Elsevier, vol. 23(3), pages 249-282, November.
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    12. AC Pritchard, 2007. "Do the Merits Matter More? The Impact of the Private Securities Litigation Reform Act," Journal of Law, Economics, and Organization, Oxford University Press, vol. 23(3), pages 627-652, October.
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