Disclosure Tone and Shareholder Litigation

• 成果类型: Article
• 署名作者: Rogers, Jonathan L.; Van Buskirk, Andrew; Zechman, Sarah L. C.
• 署名单位: University of Chicago; University System of Ohio; Ohio State University
• 刊物名称: ACCOUNTING REVIEW
• ISSN/ISSBN: 0001-4826
• DOI: 10.2308/accr-10137
• 发表日期: 2011
• 页码: 2155-2183
• 关键词: ANNUAL-REPORT READABILITY; CURRENT EARNINGS; corporate; language; words; media

摘要

We examine the relation between disclosure tone and shareholder litigation to determine whether managers' use of optimistic language increases litigation risk. Using both general-purpose and context-specific text dictionaries to quantify tone, we find that plaintiffs target more optimistic statements in their lawsuits and that sued firms' earnings announcements are unusually optimistic relative to other firms experiencing similar economic circumstances. These findings are consistent with optimistic language increasing litigation risk. In addition, we find incrementally greater litigation risk when managers are both unusually optimistic and engage in abnormal selling. This finding suggests that firms can mitigate litigation risk by ensuring that optimistic statements are not contradicted by insider selling. Finally, we find that insider selling is associated with litigation risk only when contemporaneous disclosures are unusually optimistic.