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

April 20, 2015

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

Abstract:     
Using text-based analysis of 10-K MD&A disclosures, we find that fraudulent firms produce verbal disclosure that is abnormal relative to strong counterfactuals. This abnormal text predicts fraud out of sample, has a verbal factor structure, and can be interpreted to reveal likely mechanisms that surround fraudulent behavior. Using a conservative difference-based approach, we find evidence that fraudulent managers grandstand good performance and disclose fewer details explaining the sources of the firm's performance. We also find new interpretable verbal support for existing hypotheses suggested in the literature, for example, that some managers commit fraud in order to improve their odds of raising capital at low cost.

Number of Pages in PDF File: 52

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

JEL Classification: G34, G38, G39, M41


Open PDF in Browser Download This Paper

Date posted: July 26, 2013 ; Last revised: April 23, 2015

Suggested Citation

Hoberg, Gerard and Lewis, Craig M., Do Fraudulent Firms Produce Abnormal Disclosure? (April 20, 2015). 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: 2,289
Downloads: 537
Download Rank: 31,803
References:  41

© 2015 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo7 in 0.344 seconds