Title: Frivolous or Meritorious Lawsuits? Judicial Efficiency and Corporate Disclosure

Speaker: Sterling Huang, Professor, NYU Shanghai

Time: 10:00-11:30, November 27th, 2025 (Thursday)

Venue: Room 706, Mingde Business Building (Zhongguancun Campus)

Language: Chinese & English

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 and those with weaker regulatory oversight or internal governance. 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.

SHORT BIOGRAPHY:

Professor Sterling Huang is Associate Dean of Business for Graduate Studies and a Professor of Accounting at NYU Shanghai. Professor Huang was awarded “Chang Jiang” Distinguished Chair Professorship by 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. His work has been cited extensively in major media outlets and practitioner forums, such as The Wall Street Journal, Thomson Reuters, Bloomberg, INSEAD Knowledge, Harvard Business Review, Booz & Co Strategy & Business Magazine, Barron’s Magazine, Chief Executive Magazine, American Banker Online, IMF’s Finance & Development, the Harvard Law School Forum on Corporate Governance, and the Columbia Law School’s Blog on Corporations and the Capital Markets. 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. He is also a member of the editorial boards for the Journal of Accounting, Auditing and Finance and the Journal of International Accounting Research.