Rules-Based Accounting Standards and Litigation

Some claim that rules-based accounting standards shield firms from litigation, while others argue that violations of detailed rules give plaintiffs a "roadmap" to successful litigation. We inform this debate by investigating whether rules-based standards are associated with the incidence a...

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Bibliographic Details
Published inThe Accounting review Vol. 87; no. 4; pp. 1247 - 1279
Main Authors Donelson, Dain C., McInnis, John M., Mergenthaler, Richard D.
Format Journal Article
LanguageEnglish
Published Sarasota American Accounting Association 01.07.2012
Subjects
Accounting methods
Accounting principles
Accounting standards
Class action lawsuits
Cost accounting standards
Discourse
Economic security
GAAP
Generally accepted accounting principles
Interest
International Financial Reporting Standards
Lawsuits
Litigation
Plaintiffs
Reporting standards
Revenue recognition
Studies
U.S.A
United States > US
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Summary:Some claim that rules-based accounting standards shield firms from litigation, while others argue that violations of detailed rules give plaintiffs a "roadmap" to successful litigation. We inform this debate by investigating whether rules-based standards are associated with the incidence and outcome of securities class action litigation. Overall, our results suggest that rules-based standards are associated with a lower incidence of litigation but are not associated with litigation outcomes. These results are of interest in the debate regarding the switch from a more rules-based U.S. GAAP to a more principles-based IFRS.
Bibliography:ObjectType-Article-2
SourceType-Scholarly Journals-1
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ISSN:0001-4826
1558-7967
DOI:10.2308/accr-10274