I review evidence produced by prior literature on CEO horizon problems and show that prior empirical findings are correlated with the research design employed. I find that evidence of R&D curtailment by CEOs as they approach retirement stems predominantly from cross-sectional correlations between CEO age or tenure and R&D spending. Using a broad sample of CEOs of S&P 1500 firms, I identify two factors that confound the cross-sectional relationship of firm R&D spending on CEO age or tenure which can lead to spurious inferences regarding the CEO horizon problem. I find that tracking R&D spending by the same CEOs over time produces no evidence of R&D curtailment. These results have research design implications for future researchers investigating the impact of shortened CEO career horizons on investment myopia.

Prior research documents a negative stock price reaction to initial securities lawsuit filings, on average. Prior research provides no evidence, however, regarding whether and how the market prices information subsequently generated by the litigation process. We examine the market response to a large sample of initial plaintiff complaints and subsequent docket events. Our results are consistent with the market pricing information about issues both systemic to the firm and specific to the pending lawsuit from federal court filings. First, we find the market response to the initial lawsuit filing varies significantly with information about governance and control problems signaled by details of the plaintiff's complaint. Second, we find a significant market response to subsequent court filings that increases with measures of litigation severity and decreases as the litigation progresses over time. Overall, our results highlight the role of federally accessible court filings in facilitating the market's pricing of defendant firms.

Although formal guidance instructs firms to avoid issuing lengthy and boilerplate risk factor disclosures, regulators and users of financial statements note these disclosures are excessively long and boilerplate. The persistence of these characteristics is surprising given that prior research finds that firms disclosing lengthy and boilerplate risk factors experience negative capital market consequences. We investigate two potential sources of firms' incentives to issue such disclosures by examining how judicial and regulatory assessments of firms' risk factor disclosures correlate with the disclosure length and boilerplate. Results suggest that lengthier and more boilerplate risk factor disclosures are less likely to be considered inadequate under judicial and regulatory review. Further analysis finds that when risk factor language is assessed as adequate in judicial review, industry peers borrow that language more frequently, and that judicial assessments of risk factor disclosures prompt industry peers to lengthen their risk factor disclosures.

Prior research finds that positive tone in firms' qualitative disclosures increases the risk of shareholder lawsuits. However, federal securities laws provide a safe harbor intended to shield firms' forward-looking statements from legal liability. One implication of this safe harbor is that litigation risk potentially varies between qualitative forward- and non-forward-looking statements. Consistent with this implication, we find that positive tone in forward-looking qualitative statements is significantly less related to the likelihood of subsequent litigation than is positive tone in non-forward-looking qualitative statements. On average, we fail to find a significant association between qualitative forward-looking statements and subsequent litigation. We do find evidence, however, that positive tone in qualitative forward-looking statements relates positively to subsequent litigation in two U.S. circuits in which court rulings reduced safe harbor protections for forward-looking statements. Overall, our results are consistent with the safe harbor effectively shielding firms' qualitative forward-looking statements from litigation risk.