THE EFFECT OF RETRIBUTION ON SHAREHOLDER LITIGATION AND MANAGERS' REPORTS

摘要: Shareholder litigation is important because it costly and can influence firms' reporting behavior. Prior research finds that attorneys' incentives specific firm characteristics drive shareholder litigation. In this study, I control for these known drivers in order to examine whether an additional behavioral factor, investor retribution, also drives Retribution theory suggests investors will initiate punish managers misreporting even when there no financial incentive do so. My study uses experimental markets retribution plays a role investors' decisions, if this, turn, affects managers' decisions. Consistent with economic theory, find not have option litigation, frequently misreport their reports credible. Further, so (similar current securities laws), decreases the credibility of increases. However, inconsistent but consistent so, increases approximately same level as These findings implications regulators who need accurately anticipate decisions make optimal policy