Litigation Risk and Voluntary Disclosure: Evidence from Legal Changes

• 成果类型: Article
• 署名作者: Houston, Joel F.; Lin, Chen; Liu, Sibo; Wei, Lai
• 署名单位: State University System of Florida; University of Florida; University of Hong Kong; Lingnan University
• 刊物名称: ACCOUNTING REVIEW
• ISSN/ISSBN: 0001-4826
• DOI: 10.2308/accr-52355
• 发表日期: 2019
• 页码: 247-272
• 关键词: securities class-actions; SHAREHOLDER LITIGATION; EARNINGS FORECASTS; information-content; empirical-evidence; nevada; OWNERSHIP; lawsuits; COURTS; REFORM

摘要

This paper documents that changes in litigation risk affect corporate voluntary disclosure practices. We make causal inferences by exploiting three legal events that generate exogenous variations in firms' litigation risk. Using a matching-based fixed-effect difference-in-differences design, we find that the treated firms tend to make fewer (more) management earnings forecasts relative to the control firms when they expect litigation risk to be lower (higher) following the legal event. The results are concentrated on the earnings forecasts conveying negative news and are robust to alternative specifications, samples, and outcome variables.