Publication Type
Journal Article
Version
acceptedVersion
Publication Date
6-2018
Abstract
Using the staggered adoption of universal demand (UD) laws in the United States, we study the effect of shareholder litigation risk on corporate disclosure. We find that disclosure significantly increases after UD laws make it more difficult to file derivative lawsuits. Specifically, firms issue more earnings forecasts and voluntary 8-K filings, and increase the length of management discussion and analysis (MD&A) in their 10-K filings. We further assess the direct and indirect channels through which UD laws affect firms' disclosure policies. We find that the effect of UD laws on corporate disclosure is driven by firms facing relatively higher ex ante derivative litigation risk and higher operating uncertainty, as well as firms for which shareholder litigation is a more important mechanism to discipline managers.
Keywords
Corporate disclosure, Corporate governance, Derivative lawsuits, Shareholder litigation, Universal demand laws
Discipline
Accounting | Accounting Law | Corporate Finance | Litigation
Research Areas
Corporate Reporting and Disclosure
Publication
Journal of Accounting Research
Volume
56
Issue
3
First Page
797
Last Page
842
ISSN
0021-8456
Identifier
10.1111/1475-679X.12191
Publisher
Wiley: 24 months - No Online Open
Citation
BOURVEAU, Thomas; LOU, Yun; and WANG, Rencheng.
Shareholder litigation and corporate disclosure: Evidence from derivative lawsuits. (2018). Journal of Accounting Research. 56, (3), 797-842.
Available at: https://ink.library.smu.edu.sg/soa_research/1713
Copyright Owner and License
Authors
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.
Additional URL
https://doi.org/10.1111/1475-679X.12191
Included in
Accounting Commons, Accounting Law Commons, Corporate Finance Commons, Litigation Commons