Download This PaperRules-Based Accounting Standards and Litigation
61 Pages Posted: 5 Jan 2010 Last revised: 11 Feb 2012
Date Written: February 9, 2012
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.
Keywords: Securities litigation, safe harbor, rules-based standards, principles-based standards
JEL Classification: K22, K41, M41
Suggested Citation: Suggested Citation
John M. McInnis (Contact Author)
University of Texas at Austin - Department of Accounting ( email )
Austin, TX 78712
United States
512-232-6791 (Phone)
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