The Timeliness of Bad Earnings News and Litigation Risk

被引：81

作者：

Donelson, Dain C. ^{[1
]}

McInnis, John M. ^{[1
]}

Mergenthaler, Richard D. ^{[2
]}

Yu, Yong ^{[1
]}

机构：

[1] Univ Texas Austin, Austin, TX 78712 USA

[2] Univ Iowa, Iowa City, IA 52242 USA

来源：

ACCOUNTING REVIEW | 2012年 / 87卷 / 06期

关键词：

securities litigation; disclosure; analyst forecast; earnings news; SHAREHOLDER LITIGATION; VOLUNTARY DISCLOSURE; MARKETS; FIRMS;

D O I：

10.2308/accr-50221

中图分类号：

F8 [财政、金融];

学科分类号：

0202 ;

摘要：

This study investigates whether the timely revelation of bad earnings news is associated with a lower incidence of litigation. The timeliness of earnings news is captured by a new measure based on the evolution of the consensus analyst earnings forecast. Holding total bad earnings news and other determinants of litigation constant, we find that earlier revelation of bad earnings news lowers the likelihood of litigation. This result holds for both settled and dismissed lawsuits. Further, we reconcile our findings with prior work that measures timeliness using managerial warnings via press releases. These tests suggest our findings are attributable to the ability of our timeliness measure to capture bad earning news revealed through disclosure channels beyond press releases.

引用

页码：1967 / 1991

页数：25

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