잠재적소송비용이 경영자예측정보공시에 미치는 영향

Under the voluntary disclosure, firms can decide whether they will disclose ma- nagement information such as management forecasts on sales or income to public. Voluntary disclosure is a crucial part of disclosure system which can ensure ‘full disclosure’. Whereas mandatory disclosure is enforced by laws and regulations, vo- luntary disclosure is maintained by market control mechanism. For voluntary dis- closure to be functioned properly, truth telling incentive should be provided to firms. A truth telling incentive will be in force only if bad firms cannot mimic good firms. In other words, there should exist a sufficient cost of false disclosure for voluntary disclosure system to be functioned properly in the market. A class action suit system is a good device for truth telling mechanism. Under the class action suit system, firms which disclose false information will be faced with huge potential litigation cost. And potential litigation cost under the securities class action suit can induce a truth telling behavior regarding firms’ voluntary disclosure. In the United States where class action suit is well practiced, the lawsuit concerning the managers’ false disclosure on income is secondly most popular lawsuit only next to the lawsuit concerning false statements of annual reports. In Korea, the securities class action suit has been put in force since 2005. And it becomes an interesting issue to investigate whether the introduction of the securities class action suit could change firms’ voluntary disclosure behavior towards more conservatively. This paper empirically investigates whether potential litigation cost under the securities class action suit affects firms’ voluntary disclosure behavior. The sample of the study consists of firms listed in Korean Stock Market which have disclosed management forecasts on sales from year 2002 to year 2006. The financial institu- tions are excluded from the sample. Directors’ & Officers’ Liability (D&O L) insurance premium is used as a proxy for potential litigation cost. The main results of the paper can be summarized as follows:First, the study shows that firms with high litigation cost tend to disclose more accurate management forecasts. Secondly, the paper shows that firms with high potential litigation cost tend to be conservative in disclosing management forecasts. The results of the paper are consistent with the intuitions. The firms facing high litigation costs try to minimize the chance of being sued by disclosing more accurate and conservative management forecasts.