Early empirical studies find a negative association between firm performance and shareholder activism, whereas more recent studies document a positive association. We argue and theoretically show that this change in behavior results from mandating executive compensation disclosure. We develop a...

The paper examines the relationship between share ownership by boards of British stock exchange listed companies and accrual based earnings management. It provides the first empirical evidence that the relationship is impacted by UK Company Law and the institutional governance framework.We...

If overstatements were a symptom of the agency conflict, pay-for-performance sensitivities should have increased in response to the additional penalties for misreporting imposed by SOX. Our finding of their decrease is inconsistent with the view that overstatements were an unintended consequence...

Using a sample of 2,241 shareholder lawsuits from 1996 through 2008, we identify 579 lawsuit firms (26%) with publicly traded bonds. We find a mean [median] excess bond return of -2.59% [-1.83%], and a significant increase in trading volume for these bonds around the class action filing date....

In the last three decades, corporate governance and reporting have been confronted to a drift toward shareholders' primacy and value, and the revival of old-fashioned proprietary views against entity views on the business firm. This paper develops an accounting perspective of the relationship...

Within the U.K.'s proactive financial-reporting-enforcement regime, we examine the effect of increased regulatory scrutiny on equity values. We find that a fourfold increase in the likelihood of regulator-initiated reviews of financial reports reduces equity values by 1.3% on average. Reductions...

This study examines how universal demand (UD) laws affect shareholder derivative litigation risk and financial reporting decisions. We provide evidence that the incremental risk from derivative litigation beyond parallel securities class actions or SEC actions appears low in financial reporting...

This paper documents how firms exercise discretion in defining affiliates and reporting public float in response to SEC regulations. I find that firms with higher expected compliance costs under Section 404 of the Sarbanes-Oxley Act (SOX) of 2002 tend to classify more shares as affiliated and...

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...

This paper examines the effects of executive compensation and potential for earnings management on the incidence of shareholder class action lawsuits and their outcomes. Although damage measurement factors,managerial option intensity, and earnings management all significantly affect the...