Dr. David Tabak of NERA Economic Consulting has written a working paper on the relationship between risk disclosures and damages in securities class actions. CFO.com has an article discussing the paper.
Quote of note (CFO.com): "Given the increasing potential for shareholder lawsuits, Tabak believes that top managers should give greater weight to the option of revealing the possibility of bad news before it becomes a certainty. The realization of such perils as an adverse interest-rate movement, a product failure, or an impending government probe 'could easily lead to a large decline in a company's stock price' — a greater decline, he asserts, than what would have occurred earlier if the company had merely disclosed the probability that an event would take place."Posted by Lyle Roberts at February 28, 2006 11:09 PM | TrackBack