The Effect of Litigation Risk on Management Earnings Forecasts
The Effect of Litigation Risk on Management Earnings Forecasts
Cao, Zhiyan and Narayanamoorthy, Ganapathi, "The Effect of Litigation Risk on Management Earnings Forecasts" (November 2005). Yale SOM Working Paper No. # Abstract: We examine the effect of litigation risk on managers' decision to issue earnings forecasts. We have chosen a novel measure that readily gives us a true ex-ante measure of litigation risk viz. the Directors and Officers liability insurance premiums. This choice bypasses significant problems associated with the choice of the estimation of the litigation risk equation in prior studies. We find that, when faced with ex-ante litigation risk, managers with bad news are more likely to issue an earnings warning. For good news firms, we do not see this effect. We also look at three forecast characteristics: viz. forecast horizon, forecast precision and extent of news revealed. We find that, companies, when faced with litigation risk, are imprecise with good news forecasts and very precise when they make bad news forecasts. The extent of news revealed in the forecast appears to decrease in litigation risk. Forecast horizon does not appear to vary significantly with litigation risk. Go to article
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An EMBA is essentially a part-time MBA, but the average student profile is slightly different. These programmes are aimed at experienced executives who prefer not to take a career break to take a full-time MBA and typically require significant business experience to gain admission.
Today, MBA/DBA designations can be found anywhere and even accessed through on-line, distance learning or e-learning, such as that offered by the Open University Business School of the UK which has students world-wide. Because of the varying standards of MBAs worldwide, many of the elite business schools are accredited by independent bodies, such as the Association of MBAs and the European Foundation for Management Development.
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