Abstract

http://ssrn.com/abstract=2298302
 
 

References (41)



 


 



Do Fraudulent Firms Produce Abnormal Disclosure?


Gerard Hoberg


University of Southern California - Marshall School of Business

Craig M. Lewis


Vanderbilt University - Finance

October 21, 2014

Vanderbilt Owen Graduate School of Management Research Paper No. 2298302
Robert H. Smith School Research Paper

Abstract:     
We present two new hypotheses regarding the textual disclosures of fraudulent firms. First, these firms discuss performance in a manner that is similar to their industry peers. Second, their qualitative disclosures are distinct from their industry peers but instead are similar to other fraudulent firms. We use text-based analysis of 10-K MD&A disclosures to compare disclosures of firms involved in SEC enforcement actions to various counterfactuals including each firm's own disclosure both before and after the alleged violations. We find evidence that fraudulent firms do not make qualitative disclosures that resemble their industry peers but instead cluster with other fraudulent peer firms. Content analysis reveals that fraudulent firms under-disclose details relating to governance, financial liquidity and explaining revenues.

Number of Pages in PDF File: 51

Keywords: Fraud, Disclosure, Herding, Litigation, Text Analytics, Enforcement

JEL Classification: G34, G38, G39, M41

working papers series





Download This Paper

Date posted: July 26, 2013 ; Last revised: November 25, 2014

Suggested Citation

Hoberg, Gerard and Lewis, Craig M., Do Fraudulent Firms Produce Abnormal Disclosure? (October 21, 2014). Vanderbilt Owen Graduate School of Management Research Paper No. 2298302; Robert H. Smith School Research Paper. Available at SSRN: http://ssrn.com/abstract=2298302 or http://dx.doi.org/10.2139/ssrn.2298302

Contact Information

Gerard Hoberg (Contact Author)
University of Southern California - Marshall School of Business ( email )
Marshall School of Business
Los Angeles, CA 90089
United States
HOME PAGE: http://www-bcf.usc.edu/~hoberg/
Craig M. Lewis
Vanderbilt University - Finance ( email )
401 21st Avenue South
Nashville, TN 37203
United States

Feedback to SSRN


Paper statistics
Abstract Views: 1,303
Downloads: 360
Download Rank: 47,881
References:  41

© 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 0.343 seconds