Senlin Miao, Mengchao Ai, John (Jianqiu) Bai, Ting Chen, Amy X. Sun
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引用次数: 0
Abstract
In this study, we instigate whether firms proactively change their voluntary disclosure in anticipation of the spillover of their peer firms’ litigation risk. We find that focal firms facing greater ex ante spillover litigation risk reduce disclosure activities by lowering both the likelihood of issuance and the frequency of management earnings forecasts. We then show that the effect is robust and unlikely driven by some omitted correlated variables using an alternative ex ante litigation risk measure that is not related to firm characteristics. We further demonstrate that the effect is likely causal using a difference-in-differences design where an unanticipated court ruling significantly reduces certain firms’ exposure to peers’ litigation risk spillover. The results from cross-sectional analyses are also consistent with ex ante litigation risk driving the negative relation.
期刊介绍:
The Journal of Accounting, Auditing, and Finance (JAAF) is committed to publishing high quality studies in accounting and related fields. Papers on accounting issues relating to developing in other fields such as finance, economics, and operations are also welcome. Empirical, analytical and experimental works of all varieties and paradigms, normative as well as positive, will be considered, provided they significantly contribute to the advancement of our knowledge in accounting. Manuscripts submitted should contain original unpublished research and should not be under consideration for possible publication elsewhere.