Journal article
The effect of securities litigation risk on firm value and disclosure
Contemporary accounting research, Vol.41(3), pp.1785-1818
10/01/2024
DOI: 10.1111/1911-3846.12960
Appears in UI Libraries Support Open Access
Abstract
Critics assert that securities class actions are economically burdensome and yield minimal recoveries, whereas proponents claim they deter wrongdoing. We examine key events in the recent Goldman Sachs Supreme Court case to test the net effect of securities litigation risk on shareholder value. We find that investors view securities class actions as value-increasing. However, the strength of this effect varies based on external monitoring. Investors view securities class actions as more value-enhancing when institutional ownership is low. We also use this setting to examine the effect of securities litigation risk on mandatory disclosure because the Goldman Sachs case focuses on mandatory disclosure properties. Using a difference-in-differences design, we find firm risk factor disclosures become shorter and less similar to industry peers, and they contain more uncertain and weak terms. Overall, our results show nuanced effects of securities litigation risk on shareholder value and firm disclosure.
Details
- Title: Subtitle
- The effect of securities litigation risk on firm value and disclosure
- Creators
- Dain C. Donelson - University of Iowa, AccountingChristian M. Hutzler - University of IowaBrian R. Monsen - The Ohio State UniversityChristopher G. Yust - Texas A&M University
- Resource Type
- Journal article
- Publication Details
- Contemporary accounting research, Vol.41(3), pp.1785-1818
- Publisher
- Wiley
- DOI
- 10.1111/1911-3846.12960
- ISSN
- 0823-9150
- eISSN
- 1911-3846
- Number of pages
- 34
- Language
- English
- Date published
- 10/01/2024
- Academic Unit
- Accounting
- Record Identifier
- 9984703445002771
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