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File name: SSRN-id2002808. ; Size: 922K
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Rules-Based Accounting Standards and Litigation
Dain C. Donelson
University of Texas at Austin - McCombs School of Business
John M. McInnis
University of Texas at Austin - Department of Accounting
Richard Mergenthaler Jr.
University of Iowa - Henry B. Tippie College of Business
February 9, 2012
Accounting Review, Forthcoming
McCombs Research Paper Series No. ACC-06-10
Abstract:
Some claim that rules-based accounting standards shield firms from litigation, while others argue that violations of detailed rules give plaintiffs a “roadmap” to successful litigation. We inform this debate by investigating whether rules-based standards are associated with the incidence of securities class action litigation. Overall, our results suggest that rules-based accounting standards are associated with a lower incidence of litigation. These results are of interest in the debate regarding the switch from a more rules-based U.S. GAAP to a more principles-based IFRS.
Number of Pages in PDF File: 61
Keywords: Securities litigation, safe harbor, rules-based standards, principles-based standards
JEL Classification: K22, K41, M41
working papers series
Download This Paper
Date posted: January 5, 2010
; Last revised: February 11, 2012
Suggested CitationDonelson, Dain C., McInnis, John M. and Mergenthaler, Richard Dean, Rules-Based Accounting Standards and Litigation (February 9, 2012). Accounting Review, Forthcoming; McCombs Research Paper Series No. ACC-06-10. Available at SSRN: http://ssrn.com/abstract=1531782 or http://dx.doi.org/10.2139/ssrn.1531782
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