Abstract

http://ssrn.com/abstract=1872068
 
 

References (65)



 


 



Does the Threat of Securities Litigation Deter Earnings Management?


Justin Hopkins


University of Virginia – Darden Graduate School of Business Administration

June 10, 2014


Abstract:     
This paper investigates the effects on financial reporting practices of a court ruling that made it easier for public corporations to defend against class-action litigation filed under securities laws. I find an increase in restatements and discretionary revenues for firms affected by the ruling relative to unaffected firms. Further, within affected firms, these results were concentrated among those most likely to face litigation. I also find a decline in debt covenant violations and an increase in investment levels. These results suggest that the threat of shareholder litigation can discipline managerial reporting practices.

Number of Pages in PDF File: 58

Keywords: misrepresentation, restatements, discretionary revenues, regulation, class action lawsuits

JEL Classification: K20, K22, K40, K41, K42, M41

working papers series





Download This Paper

Date posted: July 7, 2011 ; Last revised: June 17, 2014

Suggested Citation

Hopkins, Justin, Does the Threat of Securities Litigation Deter Earnings Management? (June 10, 2014). Available at SSRN: http://ssrn.com/abstract=1872068 or http://dx.doi.org/10.2139/ssrn.1872068

Contact Information

Justin Hopkins (Contact Author)
University of Virginia – Darden Graduate School of Business Administration ( email )
P.O. Box 6550
Charlottesville, VA 22906-6550
United States
Feedback to SSRN


Paper statistics
Abstract Views: 834
Downloads: 263
Download Rank: 68,655
References:  65

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo4 in 0.359 seconds