CGN: Securities Litigation (Sub-Topic)最新文献

{"title":"Post-litigation reporting conservatism","authors":"Mark P. Kim, Spencer R. Pierce, Frank Heflin, James R. Moon","doi":"10.2139/ssrn.2972155","DOIUrl":"https://doi.org/10.2139/ssrn.2972155","url":null,"abstract":"We investigate changes in financial reporting conservatism arising from disclosure-related shareholder lawsuits filed between 1996 and 2016. We find that sued firms respond to 10b-5 litigation with increased accounting conservatism. Consistent with a spillover effect, we also find that non-sued peer firms increase accounting conservatism following litigation. Despite the FASB having eliminated conservatism as an essential qualitative characteristic from the conceptual framework in 2010, we find the post-suit spike in conservatism persists after 2010, suggesting a capital market demand for conservatism even without regulator intervention. Our results, which support the widespread but untested belief that litigation events induce accounting conservatism, extend prior studies examining the disclosure effects of litigation into the accounting choice effects of litigation.","PeriodicalId":289542,"journal":{"name":"CGN: Securities Litigation (Sub-Topic)","volume":"31 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2021-07-27","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"130607620","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"Deconstructing Scienter","authors":"R. Booth","doi":"10.2139/ssrn.3826619","DOIUrl":"https://doi.org/10.2139/ssrn.3826619","url":null,"abstract":"In a typical securities fraud class action (SFCA) against a publicly traded company under SEC Rule 10b-5, the claim arises from an alleged cover-up of bad news by company agents. When the truth comes out, stock price drops, and fraud-period buyers sue to recover their losses. In most such cases, the merits of the claim turn on whether the plaintiff can plead (and ultimately prove) scienter – a wrongful state of mind – on the part of those who spoke falsely for the corporation. Moreover, the scienter of the speaker must be imputed to the corporation if the corporation is to be held liable. But the definition of scienter is nebulous at best – and especially so because securities fraud of the sort just described typically does not involve any gain for the corporation-defendant. If nothing is to be gained by the corporation-defendant, the alleged deception may be merely accidental or careless. So how do we separate the meritorious wheat from the dismissible chaff? What does it take to plead scienter in a situation in which the speaker is not obviously motivated by the prospect of gain?<br><br>The definition of scienter has evolved significantly since 1976 when it was first held by SCOTUS to be a required element of any claim under Rule 10b-5. At first, the Court defined scienter simply as a mental state embracing intent to deceive, manipulate, or defraud. The Court also acknowledged at the time that recklessness might suffice to show scienter. But so to define scienter is merely to kick the can down the road. What exactly does it mean to say that recklessness will suffice to prove scienter? The Court has repeatedly declined to require that any motive be pleaded, while itself freely discussing motive when it seems relevant. Thus, lower courts (and plaintiffs) are left to explain why a defendant corporation (or its agents acting on its behalf) would want to mislead the market when the truth is bound to come out anyway. The idea that a corporate agent might lie to the market for no reason at all would seem to suggest that negligence will suffice – which is contrary to the rationale for the scienter requirement – or that the defendant bears the burden of proof that the statement in question was made without scienter – which is contrary to the heightened pleading standard applicable to scienter.<br><br>Cleverly, SCOTUS has alluded to a possible alternative standard in a series of securities cases not involving Rule 10b-5. The genuine belief test asks whether the corporate spokesperson could or should reasonably believe their own words given known or knowable facts. This is essentially the same standard as the reasonable basis test, which has been applied in the context of actions against broker-dealers and investment advisers since the 1940s. In contrast to the traditional approach to scienter, the genuine-belief reasonable-basis (GBRB) test is an objective one that does not require any reference to motive. It does not rely on any explanation of why a cor","PeriodicalId":289542,"journal":{"name":"CGN: Securities Litigation (Sub-Topic)","volume":"136 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2021-04-14","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"116327707","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"Mandatory Arbitration and the Market for Reputation","authors":"Roy Shapira","doi":"10.2139/SSRN.3376781","DOIUrl":"https://doi.org/10.2139/SSRN.3376781","url":null,"abstract":"Is mandatory arbitration of shareholder claims desirable? With the blessing of the Supreme Court, mandatory arbitration provisions with class action waivers have become common in contract, consumer, and labor law. Policymakers now consider importing this trend to corporate and securities laws as well. The existing debate centers around consent and compensation: Can shareholders be held to consent to arbitration provisions in the company’s corporate governance documents? Are shareholders better off with arbitration, given that litigation currently offers them very little compensation (with high fees)? This Article adopts a different, information-production perspective. It examines how the choice between litigation and arbitration affects the effectiveness of market discipline. Litigation, regardless of the legal outcomes, produces a positive externality: information on corporate behavior. Internal memos, emails, spreadsheets, and transcripts that are exposed in the process give us a glimpse into how the company-in-question is ran. This information helps outside observers reassess their willingness to do business with the parties to the dispute. In other words, litigation shapes the reputations of companies and businesspersons. By shifting from litigation to arbitration, we are likely to save administrative costs, but lose some of the effectiveness of reputational deterrence. While adopting a mandatory arbitration provision can be desirable for a given company, the ex ante effects of allowing such provisions would be overall detrimental to the market.","PeriodicalId":289542,"journal":{"name":"CGN: Securities Litigation (Sub-Topic)","volume":"16 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-04-23","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"124646353","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"Bias-Corrected Estimation of Price Impact in Securities Litigation","authors":"Taylor Dove, D. Heath, J. B. Heaton","doi":"10.2139/ssrn.3321180","DOIUrl":"https://doi.org/10.2139/ssrn.3321180","url":null,"abstract":"The single-firm event studies that securities litigants use to detect the impact of a corrective disclosure on a firm’s stock price have low statistical power. As a result, observed price impacts are biased against defendants and systematically overestimate the effect on firm value. We use the empirical distribution of daily stock returns to analyze the bias and develop bias-corrected estimators of price impact in securities litigation. Because of low statistical power, the ex ante incentives against committing securities fraud are also too low. We analyze the adjustment for optimal deterrence and find that it is material, but is nowhere equal to the opposing truncation bias.","PeriodicalId":289542,"journal":{"name":"CGN: Securities Litigation (Sub-Topic)","volume":"9 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-03-24","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"126445602","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"Stockholder Litigation, Fiduciary Duties, and the Officer Dilemma","authors":"M. W. Shaner","doi":"10.4337/9781786435347.00035","DOIUrl":"https://doi.org/10.4337/9781786435347.00035","url":null,"abstract":"This book chapter traces the divergence between the development of director and officer fiduciary duties. The chapter explores the causes and consequences of this gap in corporate law. Using officer fiduciary doctrine as an example, the chapter highlights the fragile relationship between stockholder litigation and fiduciary duties and the consequences for doctrinal development. The chapter suggests remedial approaches targeted at officers' managerial role in the corporate enterprise and restoring a sense of integrity and morality in corporate management.","PeriodicalId":289542,"journal":{"name":"CGN: Securities Litigation (Sub-Topic)","volume":"1 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2018-11-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"128946375","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"Combining Bad News with Good News: A Tactic to Deter Shareholder Lawsuit","authors":"R. Li","doi":"10.2139/ssrn.3215408","DOIUrl":"https://doi.org/10.2139/ssrn.3215408","url":null,"abstract":"This paper examines the disclosure strategy of combining bad news with good news as well as its litigation risk implications. I postulate that in news combination disclosure, negative words about the bad news can serve as meaningful precautionary statements that meet the requirement of the Safe Harbor and deter shareholder lawsuits. Consistent with this postulation, I find that press releases with more negative words in news combination sentences are associated with a lower rate of lawsuit filings. The lawsuit deterrence effect is stronger for firms that are more profitable, financially healthier, and with a faster sales growth, suggesting that the deterrence is through reducing frivolous strike suits targeting at innocent and good firms. I also find that firms are more likely to use combined disclosure when facing a higher litigation risk in ex ante. Additional tests show that negative words used in the combined disclosure are not followed by bad future performance, and stockholders do not react negatively to the negative words in combined disclosure.","PeriodicalId":289542,"journal":{"name":"CGN: Securities Litigation (Sub-Topic)","volume":"6 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2018-06-16","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"117145767","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"An Unexpected Test of the Bonding Hypothesis","authors":"L. Gagnon, G. Karolyi","doi":"10.2139/SSRN.1961178","DOIUrl":"https://doi.org/10.2139/SSRN.1961178","url":null,"abstract":"We show that the U.S. Supreme Court’s ruling in the case of Morrison v. National Australia Bank in June of 2010 was associated with a statistically significant 37 basis point increase on the day in the price deviation between the U.S. cross-listed shares trading in U.S. markets and the underlying home-market shares. The Court unexpectedly ruled that the main fraud-related provisions of U.S. securities laws can apply only to transactions in foreign securities that take place in the U.S. Across our sample of almost 1,000 foreign firms from 42 different countries cross-listed on the major U.S. exchanges as well as those trading on over-the-counter (OTC) markets, the price deviations between the cross-listed and underlying home-market shares widened more dramatically for those companies with a lower presence in the U.S. as measured by the fraction of global trading that takes place in U.S. markets. The market’s revaluation of the cross-listed shares around the decision is consistent with the idea that investors care about the extent to which U.S. securities laws apply, an important driver of the bonding role that U.S. markets play.","PeriodicalId":289542,"journal":{"name":"CGN: Securities Litigation (Sub-Topic)","volume":"31 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2017-10-20","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"131609303","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"Information Bundling and Securities Litigation","authors":"Barbara A. Bliss, Frank Partnoy, Michael Furchtgott","doi":"10.2139/ssrn.2795164","DOIUrl":"https://doi.org/10.2139/ssrn.2795164","url":null,"abstract":"We exploit the exogenous shock of a 2005 U.S. Supreme Court decision on securities class action loss causation requirements to examine two ways that firms bundle information with restatements: “positive bundling” of good news and “noise bundling” of additional bad news. We find that positive bundling offsets price declines and results in less litigation. In contrast, noise bundling magnifies price declines, but nevertheless deters litigation by confounding which bad news caused a decline. Non-bundled restatements are 5.94 times more likely to result in litigation. Bundled restatements have 8.17 times higher dismissal rates and $21.17 to $23.45 million lower settlement amounts.","PeriodicalId":289542,"journal":{"name":"CGN: Securities Litigation (Sub-Topic)","volume":"31 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2016-11-26","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"126628531","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"Reforming Private Securities Litigation in China: The Stock Market Has Already Cast its Vote","authors":"Wenming Xu","doi":"10.2139/ssrn.2542800","DOIUrl":"https://doi.org/10.2139/ssrn.2542800","url":null,"abstract":"This paper employs a natural experiment research design to analyze the differences in the effects of the 2002 notice concerning private securities litigation issued by the Supreme People’s Court on stock price performance in A/B-share markets. Using a sample of 162 twin A/B-shares issued by 81 listed firms, we find that the portfolio of B-shares, which are treated and held in large volumes, obtains a significant positive treatment effect of 2.08% relative to that of A-shares over a 3-day event window. The treatment effect indicates that the collective action problem undermines the compensatory function of the private enforcement system, which is the primary goal it was designed to achieve. In addition, we look into the determinants of the abnormal return between A/B-shares issued by the same firm and find that the efficiency of the regional court system is positively correlated with the magnitude of the abnormal return. Rational investors expect that the compensation from private litigation is determined by the costs of using the judiciary system.","PeriodicalId":289542,"journal":{"name":"CGN: Securities Litigation (Sub-Topic)","volume":"215 6 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2015-06-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"134031458","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"Disaggregated Classes","authors":"Benjamin Edwards","doi":"10.2139/ssrn.2476499","DOIUrl":"https://doi.org/10.2139/ssrn.2476499","url":null,"abstract":"Federal efforts to reform federal securities class actions now reverberate in state courts and in individual actions. This article explores emerging consequences driven by national litigation trends and the Securities Litigation Uniform Standards Act (SLUSA). I argue that a new dynamic, class disaggregation, has begun to occur. Individual investors may be following institutional investors into state courts in search of better litigation outcomes. Given these developments, I argue that Congress should consider further reforms to level the field and ensure that private parties resolve disputes involving national market securities under consistent standards.","PeriodicalId":289542,"journal":{"name":"CGN: Securities Litigation (Sub-Topic)","volume":"17 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2015-03-21","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"128542195","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}