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1.
In this paper, we isolate a context – the 1995 Public Securities Litigation Reform Act – where information risk (accruals quality) is likely to change, and investigate whether the increase in accounting discretion associated with litigation reform is viewed by investors as basically opportunistic (i.e., as distorting reported earnings) or as improving the ability of reported earnings to reflect economic value. We measure accounting discretion using both positive (i.e., income-increasing) as well as absolute performance-adjusted abnormal accruals. Our analysis focuses on a constant sample of firms over a 10-year (1992–2001) period, and is structured in two stages. In the first-stage, we utilize an instrumental variable technique that isolates the increase in accounting discretion associated with the 1995 Act. In the second-stage, we relate the predicted increase in accounting discretion associated with litigation reform – obtained from the first-stage regression – to the ex ante equity risk premium for Big N audit clients. Our results suggest that the increase in accounting discretion associated with the 1995 Act was viewed by investors as basically opportunistic. Further, the exogenous nature of the 1995 Act suggests that the observed increase (and pricing) of accounting discretion is related to litigation reform rather than some omitted firm-specific operating characteristic. Overall, our findings suggest that litigation reform affects firm value through managers’ exercise of accounting discretion and cost of equity capital channels.  相似文献   

2.
We exploit the staggered adoption of the universal demand (UD) laws across U.S. states, which impedes shareholder rights to initiate derivative lawsuits, as a quasi-natural experiment to examine the relation between shareholder litigation rights and firm capital structures. We find that weaker shareholder litigation rights due to the UD laws adoption lead to higher financial leverage, which enhances firm value. Furthermore, the positive relation between the UD laws adoption and financial leverage is more pronounced for firms exposed to higher shareholder litigation risk ex ante or financially constrained firms. Our evidence is consistent with lower shareholder litigation threats motivating firms to increase financial leverage.  相似文献   

3.
We study how the market for innovation affects enforcement of patent rights. We show that patent transactions arising from comparative advantages in commercialization increase litigation, but trades driven by advantages in patent enforcement reduce it. Using data on trade and litigation of individually owned patents in the United States, we exploit variation in capital gains tax rates across states as an instrument to identify the causal effect of trade on litigation. We find that taxes strongly affect patent transactions, and that trade reduces litigation on average, but the impact is heterogeneous. Patents with larger potential gains from trade are more likely to change ownership, and the impact depends critically on transaction characteristics.  相似文献   

4.
Most U.S. states have enacted JSL reform, the move from a regime of joint and several liability (JSL) that allows plaintiffs to claim full recovery from any one of multiple defendants to one where defendants are held liable only for the harm they cause. Contrary to previous theoretical work, we show that JSL reform can increase precaution by judgment proof agent by giving “deep pockets” an incentive to reduce their own liability by bringing judgment‐proof agents into court. This result can help explain our empirical findings showing that JSL reform reduces death rates (and hence increase precaution) for many types of accidents. Together, these results highlight the role that litigation costs and judgment‐proof agents play in the functioning of the American tort system.  相似文献   

5.
The drive for efficiencies across all areas of public spending in the UK has accelerated the need for improvements in service performance. This article considers how police performance might be improved through the adoption of a ‘Lean’ philosophy. This is seen as a potential driver for internal police improvements and is made in response to the government's call for reform and to address the challenges of a decrease in future police funding.  相似文献   

6.
We examine the effect of shareholder litigation rights on managers' acquisition decisions. Our experimental design exploits a U.S. Ninth Circuit Court of Appeals ruling on July 2, 1999 that resulted in a reduction in shareholder class actions. We find that, since the ruling, firms in Ninth Circuit states acquire larger targets. Furthermore, acquirers' returns are lower in these states, especially for those with weaker corporate governance. Further analysis shows that value destruction is the result of managers' freedom to conduct empire-building acquisitions using overvalued equity. Overall, our findings indicate the importance of shareholder litigation as an external governance mechanism.  相似文献   

7.
华东  何巍 《南方金融》2012,(5):47-50
农村金融制度的构建是农村经济发展的核心问题之一。本文回顾了美国农村金融体系的发展历程,分析了美国农村金融体系的构成和特点,借鉴其成功经验,得出对我国农村金融体系改革的启示。  相似文献   

8.
Abstract: Currently, the U.S. Congress continues to debate the passage of a tort reform bill. Such a bill is intended to limit legal liabilities, particularly as they relate to product accidents. While passage of a federal law in the 1990s remains difficult, many states found tort reform a successful proposition a decade earlier. The intent of this paper is to add to the discussion regarding the expected effects of tort law modifications by providing some background on the most widely enacted state tort reforms, presenting results from the literature on actual and expected effects of these reforms, and presenting new empirical evidence on the efficacy of these same reforms. The results indicate that caps on non-economic damages and imposition of fines on frivolous litigation are negatively related to the rate of tort filings, while modification of joint and several liability demonstrates a positive relationship with the rate of tort filings, and reforms of the collateral source rule and imposition of punitive damages demonstrate no effect.  相似文献   

9.
Empirical studies have shown that large auditors are more accurate than small auditors. The reputation hypothesis states that large auditors have more incentive to be accurate because an inaccurate report may lead to a loss of client-specific rents (DeAngelo, 1981). The deep pockets hypothesis states that large auditors should be more accurate because they have greater wealth at risk from litigation (Dye, 1993). This paper presents evidence on the relationship between auditor size and litigation and on the market shares of criticised and uncriticised auditors – the findings give greater support to the deep pockets hypothesis than the reputation hypothesis.  相似文献   

10.
This study examines whether outside directors factor in litigation costs for the firm while monitoring optimal disclosure policy. It investigates the association of management earnings forecast disclosure and the proportion of outside directors across two regimes with unequal litigation costs, the United States and Canada. I find that the positive association between forecast frequency/ precision and the proportion of outside directors is stronger in Canada. This suggests that outside directors are more likely to encourage disclosure in less litigious Canada. I also find that firm‐level governance mechanisms such as outside directors and country‐level litigation environment act as governance substitutes in determining unbiased forecasts. Specifically, the negative association between forecast bias and the proportion of outside directors is stronger in Canada. I also revisit the effect of legal regime on forecast disclosure in a non‐U.S. context. Recent legislation has increased the likelihood of class‐action lawsuits in Canada. The passage of these laws has decreased the precision in forecasts by Canadian firms.  相似文献   

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