Legal Disclosure Research Articles

The Predictive Role of Analyst Coverage Intensity: Evidence from Cross-Listing in the U.S.

This paper investigates financial analysts' predictive power of future performance and earnings quality, based on their selective coverage of firms that have recently cross-listed into the U.S. This setting is useful for examining these questions because, following cross-listing, firms often experience an increase in analyst coverage and an improvement in their information environment. We find that analyst coverage is positively related to analysts' expectation about firms' future performance and negatively related to analysts' concern over firms' earnings quality. Furthermore, country-level legal origin and disclosure index are two significant determinants of analyst coverage of cross-listed firms. In addition, the intensity of analyst coverage can predict future abnormal stock price performance. Our latter finding augments those in Das, Guo, and Zhang (2006), who investigate the predictive role of analyst coverage following IPOs. The benefit of our setting is that, unlike the post-IPO period, cross-listing firms do not appear to experience mis-pricing that might confound the results. Overall, our study further documents the substantial informational benefits to cross-listing, but suggests that these informational benefits may not be complete, since financial analysts appear to have predictive power and selectively provide coverage for firms with favorable future prospects.

A Qualified Defense of Legal Disclosure Requirements

Ken Kipnis provides a thoughtful and provocative argument in favor of unqualified medical confidentiality (Kipnis 2006). Although I agree with a number of his points, I am not certain that his argu...

Mandatory Disclosure: A Behavioral Analysis

Mandatory disclosure is a defining characteristic of U.S. securities regulation. Issuers selling securities in a public offering must file a registration statement with the SEC containing detailed disclosures, and thereafter comply with the periodic disclosure regime. This regime has been highly controversial among legal academics. Some scholars argue market forces will produce optimal levels of disclosure in a regime of voluntary disclosure, while others argue that various market failures necessitate a legal mandatory disclosure system. To date, however, both sides in this debate have assumed, inter alia, that market actors rationally pursue wealth maximization goals. In contrast, this paper draws on the emergent behavioral economics literature to ask whether systematic departures from rationality, such as herd behavior or the status quo bias, might result in a capital market failure. The paper concludes that such a market failure could occur, especially in emerging markets, but also contends that one should not jump to the conclusion that legal intervention in the form of a mandatory disclosure system is necessary, especially insofar as the highly evolved U.S. capital markets are concerned. The paper concludes with a cautionary note against the potential for behavioral economics to be glibly invoked as a justification for government intervention.

Executive Incentive Compensation Schemes and their Impact on Corporate Performance: Evidence from New Zealand Since Legal Disclosure Requirements Became Effective

For many years, executive compensation has been regarded as an internal mechanism to alleviate the agency problems between executives and shareholders. Using a sample of 73 New Zealand listed companies (1994-1998), this paper examines the current state of executive compensation in New Zealand and the relationship between executive incentive compensation and firm performance. The empirical results concerning the relationship between executive compensation and corporate performance indicate that company size and business risk are important factors affecting executive compensation level. The results also show that neither compensation level nor the adoption of an incentive compensation scheme (ICS) are significantly related to corporate performance. However, the relationship between Tobin's q and executive share ownership is found to be strong and statistically significant, while the relationship is found to be insignificant when ROE and ROA are used as a proxy for corporate performance. These negative results suggest that the design of the executive compensation contract has not yet contributed to the reduction of agency costs for companies in New Zealand.

Use of certificates of confidentiality in nursing research.

To discuss the use of Certificates of Confidentiality in nursing research. In situations that are particularly complex, sensitive, and in which the participants are extremely vulnerable, a Certificate of Confidentiality issued by the U.S. Department of Health and Human Services (DHHS) may be useful to help ensure the privacy of research participants. Theoretical and research literature, DHHS documents, and research experience. Not all research with vulnerable populations requires the additional protection provided by Certificates of Confidentiality. However, certificates may be indicated in studies in which participants and researchers may be exposed to compelled legal disclosure of research data.

A Behavioral Economic Analysis of Mandatory Disclosure: A Thought Experiment Turned Cautionary Tale

Mandatory disclosure is a defining characteristic of U.S. securities regulation. Issuers selling securities in a public offering must file a registration statement with the SEC containing detailed disclosures, and thereafter comply with the periodic disclosure regime. This regime has been highly controversial among legal academics. Some scholars argue market forces will produce optimal levels of disclosure in a regime of voluntary disclosure, while others argue that various market failures necessitate a legal mandatory disclosure system. To date, however, both sides in this debate have assumed, inter alia, that market actors rationally pursue wealth maximization goals. In contrast, this paper draws on the emergent behavioral economics literature to ask whether systematic departures from rationality, such as herd behavior or the status quo bias, might result in a capital market failure. The paper concludes that such a market failure could occur, especially in emerging markets, but also contends that one should not jump to the conclusion that legal intervention in the form of a mandatory disclosure system is necessary, especially insofar as the highly evolved U.S. capital markets are concerned. The paper concludes with a cautionary note against the potential for behavioral economics to be glibly invoked as a justification for government intervention.

Do written consent forms influence clients' first impressions of therapists?

Students (24 men, 105 women) rated a hypothetical psychologist after reading some combination of (a) a question sheet (Handelsman & Galvin, 1988), (b) a form designed to conform to a new Colorado law, and (c) a general brochure about psychologists. The legal form increased the likelihood of recommending "Dr. Doe" to a friend; when the brochure was included, the form also increased judgments of experience. The question sheet increased recommendations, judgments of likeability and trustworthiness, and (when the brochure was absent) the likelihood of going to Dr. Doe oneself. In a second study, students (44 men, 93 women) received the legal disclosure form; some also received the question sheet. They were told that Dr. Doe had 0, 9, or 19 years of experience. The question sheet increased ratings of trustworthiness and likelihood of going oneself. Therapists with at least 9 years of experience were recommended more.

The Development of Legal Disclosure Requirements: the Case of Charitable Donations

Abstract The requirement that companies disclose the extent of their charitable contributions is an unusual feature of British company law. The purpose of this paper is to trace the development of the requirement from the opinion of the Jenkins Committee on company law reform, that no separate requirement be introduced, through to its appearance in the Companies Act 1967. Drawing on records of Parliamentary debates for the details of the views expressed and the arguments advanced, the paper demonstrates how a Labour Government's desire to have political donations revealed led to the introduction of mandatory disclosure of charitable contributions. The paper is thus a case study of the making of the law relating to financial disclosure.