We examine the causal effect of managerial litigation risk on managers’ disclosure of earnings warnings in the face of large earnings shortfalls. Exploring the staggered adoption of universal demand (UD) laws as an exogenous decrease in litigation risk, we find that the adoption leads to a decrease in managers’ issuance of earnings warnings, especially among firms facing a higher litigation risk prior to the adoption. In contrast, we find no change in managers’ tendency to alert investors of impending large positive earnings surprises. Collectively, our results provide causal evidence that higher litigation risk incentivizes managers to issue more earnings warnings. Our results differ from Bourveau et al.’s finding of an increase in the frequency of management earnings forecasts after the adoption of UD laws. We reconcile our findings with theirs by demonstrating that the effect of adopting UD laws on management earnings forecasts depends critically on forecast horizon: The adoption increases long‐horizon forecasts, but decreases short‐horizon forecasts.

中文翻译：

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管理诉讼风险对盈余预警的影响：来自自然实验的证据

面对巨大的收入缺口，我们研究了管理诉讼风险对经理披露盈余警告的因果关系。探索通过普遍采用（UD）法律作为诉讼风险的外生性降低的交错方式，我们发现采用该法规会导致管理人员发布盈余警告的次数减少，尤其是在采用之前面临较高诉讼风险的公司中。相比之下，我们发现经理人未必会警告投资者即将出现大笔正数盈余的趋势。总的来说，我们的结果提供了因果关系，即较高的诉讼风险会激励管理人员发出更多的盈余警告。我们的结果与Bourveau等人的发现不同，后者发现在采用UD法后，管理层收入预测的频率会增加。