A survey of litigation in corporate finance

Arena, Matteo P.; Ferris, Stephen P.

doi:10.1108/mf-07-2016-0199

Cited by 33 publications

(22 citation statements)

References 103 publications

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“…Moreover, some studies suggest that clawback adoption increases accounting quality and strengthens overall governance (Chan et al , 2012; and Iskandar-Datta and Jia, 2013). At the same time, prior literature on litigation shows that better monitoring of management and stronger corporate governance can reduce the incidence of lawsuits (Farber, 2005; Marciukaityte et al , 2006; Ferris et al , 2007; Karpoff et al , 2008; and Arena and Ferris, 2017).…”

Section: Discussionmentioning

confidence: 99%

“…At the same time, studies on litigation risk and corporate lawsuits have found that the threat of litigation and actual lawsuits can motivate a firm’s decision to improve corporate governance practices (Arena and Ferris, 2017). For example, Romano (1991) and Humphery-Jenner (2012) find that managerial turnover is more common for firms involved in litigation.…”

Section: Literature Review and Hypothesis Developmentmentioning

confidence: 99%

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Compensation clawback policies and corporate lawsuits

Arena

Nguyen

2019

JFRC

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Purpose The purpose of this paper is to study the relation between compensation clawbacks and lawsuits and analyze how these two corporate disciplinary forces interact. This paper hypothesizes that by allowing firms to recoup compensation from managers who breach their fiduciary duty, clawbacks provide a form of discipline that potentially reduces the likelihood of managerial wrongdoing, which, in turn, lowers the risk of corporate lawsuits. Design/methodology/approach This paper identifies whether or not a company in the S&P 1500 had a clawback policy between 2007 and 2014 by searching the company filings and press releases. The authors also construct different proxies for litigation risk and lawsuit outcomes using the Audit Analytics Database. They then perform a variety of empirical tests to examine the association between clawbacks and litigation risk and the association between clawbacks and litigation outcomes. Findings This paper finds that firms with higher litigation risk are more likely to adopt a clawback policy. In addition, after the adoption of clawback provisions, litigation risk significantly declines, suggesting that clawback policies are effective in reducing the likelihood of corporate lawsuits. Furthermore, firms with clawback policies are approximately 50 per cent more likely to have lawsuits against them dismissed or settled for lower amounts (approximately 12 per cent lower). Practical implications The findings of this paper provide insights to the efficacy of a current change in compensation regulation, the mandatory clawback adoption requirement by the Dodd–Frank Act of 2010. Originality/value This paper contributes to the literature on both clawbacks and litigation, as it is the first to analyze the relation between the two.

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Section: Discussionmentioning

confidence: 99%

Section: Literature Review and Hypothesis Developmentmentioning

confidence: 99%

Compensation clawback policies and corporate lawsuits

Arena

Nguyen

2019

JFRC

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“…Whistle blowing procedures are supported because they are considered as part of an organization's internal control. Arena and Ferris, (2017) claimed that the weak legislation is one of the key causes of rising internet fraud; as a result of outdated legalization, criminals take advantage of the opportunity to avoid law enforcement organizations. As a result, the country's latest fraud tactics and laws are also established in accordance with fraud techniques.…”

Section: Causesmentioning

confidence: 99%

Prevention of Frauds in Public Sector Organizations: A Case of Pakistan

Rizvi¹

2021

JDSS

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The fraud prevention is neither possible nor sustainable without understanding and eradicating the causes of the fraud, reform and align the Internal control mechanism using 21 st century technology, public awareness movements promoting "Corruption as social evil" and corrupt people as "Public foes". This study presents the global perspective on frauds based on quality research published in impact factor Journals only and local scenario based on expert reflections from audit, accounting, operations and management personnel being the stakeholders of the existing system who witnessed the phenomena inside out. The qualitative study was done using interpretivism approach, implying mixed method and conducting interviews, survey and focus group for data collection and analysis. The researcher has developed a Fraud Detection and Prevention mechanism that provides a comprehensive solution and road map to address the issue of Fraud in public sector organizations. This research is equally important for legislature, public sector management, accounts and audit professionals and can be used for capacity building of public sector employees and for developing policy framework.

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“…According to Arena and Ferris (2017), one of the major causes of increasing online fraud is weak legislation; due to outdated legalization, criminals take the advantages to get rid off from the law enforcement agencies. So, keeping in view, the latest fraud techniques laws of the country also are formulated as per fraud techniques.…”

Section: Litigation Supportmentioning

confidence: 99%

A Qualitative Perspective of Practical Implication of Forensic Accounting for Fraud Detection and Prevention in Pakistan

Zahid

Aslam

2020

RMCJ Soc. & Hum.

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The staple objectives of this study are to determine the importance and worth of forensic accounting in the context of Pakistan. Accounting frauds are increasing day by day, especially in the commercial sector of Pakistan. In the majority of Pakistani companies' accountants are inexperienced and nonprofessional and unable to understand the new financial reporting standard that becomes a cause of enhancing accounting frauds. This study followed a qualitative approach to collect data through interviews from both participants, including academicians and practitioners who are working in a prestigious academic institution and business organization where the concept of forensic accounting is taught and implemented with the right letter and spirit. Finding have been derived by transcribing data through coding and taking essential themes regarding the practical implementation of forensic accounting practices in Pakistan by using NVIVO software. The findings of the study indicated that forensic accounting scope is broad, especially regarding the increasing ratio of white-collar crimes and digital crimes, and in a near-future lot of opportunities will be arises in Pakistan in the context of forensic accounting. Both academicians and practitioners agreed that the importance of forensic accounting could not be overlooked, especially concerning digital and white-collar frauds both in the private sector and public sector organizations.

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A survey of litigation in corporate finance

Cited by 33 publications

References 103 publications

Compensation clawback policies and corporate lawsuits

Compensation clawback policies and corporate lawsuits

Prevention of Frauds in Public Sector Organizations: A Case of Pakistan

A Qualitative Perspective of Practical Implication of Forensic Accounting for Fraud Detection and Prevention in Pakistan

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