The Private Securities Litigation Reform Act (PSLRA) increases restrictions on private litigation for securities fraud. We examine stock price reactions on legislative-event-related days of firms in four high-litigation-risk industries. Two other studies on this issue, Spiess and Tkac (1997)...

This Essay examines the stock market's reaction to the Ninth Circuit's decision in re Silicon Graphics Securities Litigation. That decision adopted the most stringent interpretation of the Private Securities Litigation Reform Act's quot;strong inferencequot; standard for pleading scienter in...

The paper investigates how auditor resignations affect capital market participants' perception of firms from which the auditors resign (quot;former clientsquot;) and of firms that continue as clients of the resigning auditor (quot;continuing clientsquot;). We find that resignation announcements...

This article analyzes the impacts that three alternative damage apportionment rules have an owner?s financial reporting decision, an auditor?s audit quality choice, and investors? pricing decisions within the context of a perfectly competitive securities market and owner solvency constraints....

We examine the market reaction to a sample of 403 restatements announced from 1995 to 1999. We document an average abnormal return of about -9 percent over a two-day announcement window. We find that more negative returns are associated with restatements involving fraud, affecting more accounts,...

Why do 60% of target boards voluntarily solicit and pay for seemingly worthless 'Texas-wide' fairness opinions while 40% of their peers do not? Our new insight is that target boards speak to more than one shareholder generation through fairness opinions. We model fairness opinions as a...

The Sarbanes-Oxley Act of 2002 (SOX) proscribes so-called “affiliated hires” of financial executives. More specifically, SOX requires that firms wait at least one year before hiring an individual recently employed as a member of the firm’s external audit team. The intent of the regulation...

We examine the association between financial restatement and firm value, based on a sample of firms that restated financial statement in Chinese listed firms between January 2005 and December 2009. Using Tobin's Q as a proxy for firm value in the end of restatement year, we find firm value in...

The 1964 Securities Acts Amendments extended the mandatory disclosure requirements that had applied to listed firms since 1934 to large firms traded Over-the-Counter (OTC). We find several pieces of evidence indicating that investors valued these disclosure requirements, two of which are...

We investigate the association between financial restatements and internal controls by examining whether voluntary restatement decisions are associated with internal control quality. We focus on companies’ voluntary restatements because they are more susceptible to the numerous provisions...