Corporate Governance and Securities Class Actions

Posted: 14 Nov 2014

See all articles by Larelle Law Chapple

Larelle Law Chapple

QUT School of Business; Financial Research Network (FIRN)

Victoria Clout

School of Accounting, UNSW Business School, UNSW Australia

David Tan

School of Finance, Actuarial Studies, and Applied Statistics, Australian National University

Date Written: November 13, 2014

Abstract

This study investigates the governance attributes of firms that have been subject to securities class actions (SCAs). There has been a recent sizable increase in the number of firms subject to SCAs in Australia. We examine a sample of firms that have been subject to SCAs due to disclosure breaches and match the firms by industry and size to a control sample. First, we examine the compliance culture of the SCA firms via the frequency of Australian Securities Exchange (ASX) queries of the firm and find that the frequency of ASX queries is positively associated with the occurrence of a SCA. Secondly, we provide evidence that SCA firms exhibit weaker levels of corporate governance than the matched control sample. In addition, we contribute to the understanding of firms subject to SCAs and their corporate governance attributes. Our results suggest the presence of a nomination committee may be associated with higher agency costs and that the influence of CEO duality may reduce the effectiveness of a nomination committee.

Keywords: Class actions, disclosure, governance, litigation, securities exchanges

Suggested Citation

Law Chapple, Larelle and Clout, Victoria and Tan, David, Corporate Governance and Securities Class Actions (November 13, 2014). Australian Journal of Management, Vol. 39, No. 4, 2014, Available at SSRN: https://ssrn.com/abstract=2523903

Larelle Law Chapple (Contact Author)

QUT School of Business ( email )

GPO Box 2434
Brisbane, Queensland 4001
Australia

Financial Research Network (FIRN)

C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia

HOME PAGE: http://www.firn.org.au

Victoria Clout

School of Accounting, UNSW Business School, UNSW Australia ( email )

Sydney, NSW, NSW 2052
Australia
+6193856957 (Phone)

David Tan

School of Finance, Actuarial Studies, and Applied Statistics, Australian National University ( email )

Canberra, Australian Capital Territory 0200
Australia

HOME PAGE: http://cbe.anu.edu.au/staff/info.asp?Surname=Tan&Firstname=David

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