Earnings Disclosures and Stockholder Lawsuits

46 Pages Posted: 5 Jun 1995  

Douglas J. Skinner

The University of Chicago - Booth School of Business

Abstract

This paper provides evidence on the relation between the timeliness of voluntary earnings disclosures and the outcomes of related stockholder litigation. Like Francis Philbrick and Schipper (1994a) I find that many lawsuits result from voluntary disclosures of adverse earnings news. However I also document that: (1) many voluntary earnings disclosures are not made on a timely basis; (2) less timely voluntary disclosures result in more costly lawsuit outcomes; (3) a simple model that predicts that lawsuits occur if large firms release adverse earnings news on earnings announcement dates works well in predicting stockholder litigation. Overall it seems lawsuit outcomes depend at least to some degree on the "merits" of stockholders' claims so that managers can benefit by making more timely earnings disclosures.

JEL Classification: K22

Suggested Citation

Skinner, Douglas J., Earnings Disclosures and Stockholder Lawsuits. Available at SSRN: https://ssrn.com/abstract=55489 or http://dx.doi.org/10.2139/ssrn.55489

Douglas J. Skinner (Contact Author)

The University of Chicago - Booth School of Business ( email )

5807 S. Woodlawn Avenue
Chicago, IL 60637
United States
773-702-7137 (Phone)

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