Spillover effects of class action lawsuits on managerial earnings forecast characteristics
No Thumbnail Available
Authors
Meeting name
Sponsors
Date
Journal Title
Format
Thesis
Subject
Abstract
This study uses securities class action lawsuits filed between 1998 and 2017 to examine the spillover effects of the lawsuits on the accuracy, precision, specificity, and horizon of peer firms' management earnings per share (EPS) forecasts. Peer firms with high ex-ante litigation risk improve their forecast accuracy, precision, specificity, and horizon following intra-industry class action lawsuits, mainly when the accusations are based on merits. The improvements in the guidance accuracy significantly decreases the likelihood of the peer firms being targeted in a class action lawsuit in the future. Peer firms with completed annual financial audits issue more accurate guidance compared to their counterparts with incomplete annual financial audits however, management EPS forecast accuracy does not incrementally improve for the high ex-ante litigation risk peer firms in the post-litigation period. Last, peers with high ex-ante litigation risk prefer bundled guidance over stand-alone guidance in the post-litigation period, aiming for a greater impact on analyst expectations.
Table of Contents
DOI
PubMed ID
Degree
Ph. D.