Shareholder Litigation and Changes in Disclosure Behavior

Rogers, Jonathan L.; Van Buskirk, Andrew

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Shareholder Litigation and Changes in Disclosure Behavior

AAA 2007 Financial Accounting & Reporting Section (FARS) Meeting Paper

Journal of Accounting & Economics (JAE), Vol. 47, No. 1-2, 2009

58 Pages Posted: 15 Sep 2006 Last revised: 16 May 2011

See all articles by Jonathan L. Rogers

Jonathan L. Rogers

University of Colorado at Boulder - Leeds School of Business

Andrew Van Buskirk

Ohio State University (OSU) - Department of Accounting & Management Information Systems

Date Written: April 1, 2008

Abstract

We examine changes in the disclosure behavior of firms involved in 827 disclosure-related class-action securities litigation cases filed between 1996 and 2005. We find no evidence that the firms in our sample respond to the litigation event by increasing or improving their disclosures to investors. Rather, we find consistent evidence that firms reduce the level of information provided post-litigation. Our results suggest that the litigation process encourages firms to decrease the provision of disclosures for which they may later be held accountable, despite the increased protections afforded by the Private Securities Litigation Reform Act of 1995.

Keywords: Disclosure, Litigation, Management Forecasts, Earnings Surprises, Litigation Risk, Conference Calls, Forecast Properties

JEL Classification: M41, M45, G14, K22

Suggested Citation: Suggested Citation

Rogers, Jonathan L. and Van Buskirk, Andrew, Shareholder Litigation and Changes in Disclosure Behavior (April 1, 2008). AAA 2007 Financial Accounting & Reporting Section (FARS) Meeting Paper, Journal of Accounting & Economics (JAE), Vol. 47, No. 1-2, 2009, Available at SSRN: https://ssrn.com/abstract=930654