Frivolous or Meritorious Lawsuits? Judicial Efficiency and Corporate Disclosure
Release time：18 November 2025
Nov
21
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Time & Date
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10:30 am
-
12:00 pm,
November
21,
2025
(Friday)
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Venue
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Room 102, Conference Complex Ⅱ
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| TOPIC | Frivolous or Meritorious Lawsuits? Judicial Efficiency and Corporate Disclosure |
| TIME&DATE | 10:30 am - 12:00 am, November 21, 2025 (Friday) |
| Venue | Room 102, Conference Complex Ⅱ |
| Speaker |
Sterling Huang New York University-Shanghai |
| Abstract | We study how judicial efficiency affects the composition of shareholder litigation lawsuits and its impact on corporate disclosure. Exploiting the staggered adoption of the Case Management/Electronic Case Files (CM) system across U.S. federal district courts, we find that improved judicial efficiency significantly reduces firms’ exposure to frivolous lawsuits while increasing the incidence of meritorious claims. These shifts in composition of litigation risk lead to more frequent earnings guidance, more extensive and readable MD&A discussions, and greater disclosure of both good and bad news among treated firms (located in jurisdictions that adopted the CM system). The effects are more pronounced for firms headquartered in states permitting third-party litigation financing, which serves to encourage frivolous lawsuits, and among firms with weaker regulatory oversight or internal governance, who are disciplined more from the threat of meritorious lawsuits. We also find an increase in market reactions to management forecasts among treated firms following the CM system adoption, consistent with enhanced disclosure credibility. Our findings highlight the importance of understanding judicial frictions in affecting both the composition of shareholder litigation and corporate information environment. |
| Biography | Professor Sterling Huang is Associate Dean of Business (Graduate Studies) and a Professor of Accounting at NYU Shanghai. Professor Huang was awarded “Chang Jiang” Distinguished Chair Professorship from the Ministry of Education China and NSFC Research Fund for International Excellent Young Scientists. Professor Huang's research has been widely published in leading academic journals, including the Journal of Accounting Research, The Accounting Review, Journal of Accounting and Economics, Review of Financial Studies, Management Science, Journal of Financial Economics, Strategic Management Journal, Journal of Financial and Quantitative Analysis, and Contemporary Accounting Research. His work has received multiple awards, including Top 20 Most Read Paper in Journal of Accounting Research 2018, Top Cited Articles Contributing to the 2020 Journal of Accounting Research Impact Factor, and 2023 Management Accounting Section Best Paper Award. In addition to his research contributions, Professor Huang serves as an associate editor of the Journal of Corporate Finance, editor of Corporate Governance: An International Review, and editor of China Accounting and Finance Review. |
