Measuring securities litigation risk

• 成果类型: Article
• 署名作者: Kim, Irene; Skinner, Douglas J.
• 署名单位: University of Chicago; George Washington University
• 刊物名称: JOURNAL OF ACCOUNTING & ECONOMICS
• ISSN/ISSBN: 0165-4101
• DOI: 10.1016/j.jacceco.2011.09.005
• 发表日期: 2012
• 关键词: shareholder litigation; FINANCIAL RATIOS; merits matter; earnings; disclosure; REFORM; FIRMS; CONSEQUENCES; ENFORCEMENT; incentives

摘要

Extant research commonly uses indicator variables for industry membership to proxy for securities litigation risk. We provide evidence on the construct validity of this measure by reporting on the predictive ability of alternative models of litigation risk. While the industry measure alone does a relatively poor job of predicting litigation, supplementing this variable with measures of firm characteristics (such as size, growth, and stock volatility) considerably improves predictive ability. Additional variables such as those that proxy for corporate governance quality and managerial opportunism do not add much to predictive ability and so do not meet the cost-benefit test for inclusion. (C) 2011 Elsevier B.V. All rights reserved.