Corporate governance and securities class actions

Larelle Chapple, Victoria Clout and David Tan
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Larelle Chapple: QUT Business School, Queensland University of Technology, Brisbane, QLD, Australia
David Tan: School of Aviation, University of New South Wales, Sydney, NSW, Australia; Research School of Finance, Actuarial Studies, and Applied Statistics, Australian National University, Canberra, ACT, Australia

Australian Journal of Management, 2014, vol. 39, issue 4, 525-547

Abstract: This study investigates the governance attributes of firms that have been subject to securities class actions (SCAs). There has been a recent sizable increase in the number of firms subject to SCAs in Australia. We examine a sample of firms that have been subject to SCAs due to disclosure breaches and match the firms by industry and size to a control sample. First, we examine the compliance culture of the SCA firms via the frequency of Australian Securities Exchange (ASX) queries of the firm and find that the frequency of ASX queries is positively associated with the occurrence of a SCA. Secondly, we provide evidence that SCA firms exhibit weaker levels of corporate governance than the matched control sample. In addition, we contribute to the understanding of firms subject to SCAs and their corporate governance attributes. Our results suggest the presence of a nomination committee may be associated with higher agency costs and that the influence of CEO duality may reduce the effectiveness of a nomination committee.

Keywords: Class actions; disclosure; governance; litigation; securities exchanges (search for similar items in EconPapers)
JEL-codes: K22 K42 M49 (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (8)

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Persistent link: https://EconPapers.repec.org/RePEc:sae:ausman:v:39:y:2014:i:4:p:525-547

DOI: 10.1177/0312896213512320

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