The Information Content of Publicly Accessible Federal Court Documents

• 成果类型: Article
• 署名作者: Carrizosa, Richard D.; Cazier, Richard A.
• 署名单位: University of North Carolina; University of North Carolina Charlotte; University of North Texas System; University of North Texas Denton
• 刊物名称: ACCOUNTING REVIEW
• ISSN/ISSBN: 0001-4826
• DOI: 10.2308/TAR-2020-0599
• 发表日期: 2022
• 页码: 139-161
• 关键词: internal control weaknesses; corporate governance; REPORT READABILITY; disclosure; earnings; complexity; IMPACT

摘要

Prior research documents a negative stock price reaction to initial securities lawsuit filings, on average. Prior research provides no evidence, however, regarding whether and how the market prices information subsequently generated by the litigation process. We examine the market response to a large sample of initial plaintiff complaints and subsequent docket events. Our results are consistent with the market pricing information about issues both systemic to the firm and specific to the pending lawsuit from federal court filings. First, we find the market response to the initial lawsuit filing varies significantly with information about governance and control problems signaled by details of the plaintiff's complaint. Second, we find a significant market response to subsequent court filings that increases with measures of litigation severity and decreases as the litigation progresses over time. Overall, our results highlight the role of federally accessible court filings in facilitating the market's pricing of defendant firms.