The Composition of Top Management with General Counsel and Voluntary Information Disclosure

Journal of Accounting and Economics 54 (1), 19-41

45 Pages Posted: 28 Sep 2013 Last revised: 24 Aug 2020

See all articles by Byungjin Kwak

Byungjin Kwak

KAIST-Graduate School of Finance

Byung T. Ro

Purdue University - Krannert School of Management

Inho Suk

State University of New York (SUNY) at Buffalo - School of Management; Korea University Business School (KUBS)

Date Written: March 10, 2012

Abstract

We examine whether the composition of top management with General Counsel (GC) affects properties of management earnings forecasts disclosures. After controlling for corporate governance and litigation risk, we find that firms with a GC in top management are more likely to issue forecasts, particularly bad news forecasts, than other firms. Further, their forecasts are less optimistic and more accurate than those issued by others. Consistently, the stock price reaction to their forecast news is stronger. These effects are more pronounced when the GC’s managerial status is higher. Overall, our results suggest that GCs play an important role in corporate disclosures.

Keywords: Top management composition, General counsel, Voluntary governance mechanism, Voluntary information disclosure, Management earnings forecasts

JEL Classification: G3, K41, M19, M41, M48

Suggested Citation

Kwak, Byungjin and Ro, Byung T. and Suk, Inho, The Composition of Top Management with General Counsel and Voluntary Information Disclosure (March 10, 2012). Journal of Accounting and Economics 54 (1), 19-41, Available at SSRN: https://ssrn.com/abstract=2332054

Byungjin Kwak

KAIST-Graduate School of Finance ( email )

87 Hoegiro
Dongdaemun-Gu
Seoul, 130-722
Korea
+82-2-958-3417 (Phone)

Byung T. Ro

Purdue University - Krannert School of Management ( email )

1310 Krannert Building
West Lafayette, IN 47907-1310
United States
765-494-4512 (Phone)
765-494-9658 (Fax)

Inho Suk (Contact Author)

State University of New York (SUNY) at Buffalo - School of Management ( email )

342 Jacobs Management Center
Buffalo, NY 14260-4000
United States
716-645-3215 (Phone)

Korea University Business School (KUBS) ( email )

Anam-Dong, Seongbuk-Gu
Seoul 136-701, 136701
Korea

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