Logo image
Back
Shareholder litigation risk and the information environment: Revisiting evidence from two natural experiments
Journal article   Peer reviewed

Shareholder litigation risk and the information environment: Revisiting evidence from two natural experiments

Audra Boone, Eliezer Fich and Thomas Griffin
Journal of corporate finance (Amsterdam, Netherlands), v 82, 102444
Oct 2023
DOI: https://doi.org/10.1016/j.jcorpfin.2023.102444

Abstract

Disclosure Information environment Shareholder litigation Silicon graphics inc. ruling Universal demand laws
A court case that reduced securities class action litigation risk led to less frequent voluntary disclosure but did not significantly alter information asymmetry among market participants. Conversely, state laws that reduced derivative litigation risk led to more frequent voluntary disclosure but resulted in significantly higher information asymmetry. To reconcile these differences, we highlight that 10b-5 securities class actions address disclosure, while derivative suits can address broader corporate wrongdoing, leading to differential effects on firm operations. Our results suggest that the observed effect of derivative litigation risk on the information environment is primarily driven by concomitant changes in firm operations.

Metrics

22 Record Views
14 citations in Web of Science
11 citations in Scopus

Details

InCites Highlights

Data related to this publication, from InCites Benchmarking & Analytics tool:

Collaboration types
Domestic collaboration
Web of Science research areas
Business, Finance
Logo image