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Cited by 592

The DOI matches its Crossref record; 53 of the 53 references it cites were found in a registry or an index.

Disclosure Tone and Shareholder Litigation

Open access
Rogers, Jonathan L., Van Buskirk, Andrew, Zechman, Sarah L. C.·2011·SSRN Electronic Journal
DOI 10.2139/ssrn.1331608
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Abstract

ABSTRACT We examine the relation between disclosure tone and shareholder litigation to determine whether managers' use of optimistic language increases litigation risk. Using both general-purpose and context-specific text dictionaries to quantify tone, we find that plaintiffs target more optimistic statements in their lawsuits and that sued firms' earnings announcements are unusually optimistic relative to other firms experiencing similar economic circumstances. These findings are consistent with optimistic language increasing litigation risk. In addition, we find incrementally greater litigation risk when managers are both unusually optimistic and engage in abnormal selling. This finding suggests that firms can mitigate litigation risk by ensuring that optimistic statements are not contradicted by insider selling. Finally, we find that insider selling is associated with litigation risk only when contemporaneous disclosures are unusually optimistic. JEL Classifications: G38; K22; M41; M48. Data Availability: Data are available from sources indicated in the text.

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Metadata

Authors
Rogers, J. L., Van Buskirk, A., & Zechman, S. L. C.
Venue
SSRN Electronic Journal
Publisher
Elsevier BV
Published
2011
Volume
86
Issue
6
Pages
2155-2183
ISSN
  • 0001-4826 (ISSN-L)
  • 1556-5068
DOI
10.2139/ssrn.1331608
OpenAlex
W3124888963
Cited by
592
References
53
FWCI
76.65
Type
journal article
Language
en
Open access
green

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