GREY:LSTMF - Post by User
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lightscamon Feb 13, 2017 3:46pm
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Post# 25839110
YES THATS WHAT HAPPENED
YES THATS WHAT HAPPENEDSHAREHOLDERS HAVE PAID FOR CEO/DIRECOTORS INSURANCE, NOW LET US USE IT! D. Securities Litigation The Busyness Hypothesis predicts that directors holding multiple directorships will have insufficient time to monitor the firm's managers, including the accuracy of their public statements, and, more critically, the firm's financial disclosures. An active board is an important backstop for a firm's auditors in their efforts to maintain the integrity of corporate financial disclosure. Thus, the undersupervised managers of these firms are more likely to make misstatements about the firm and distort its reported results. Consequently, the Busyness Hypothesis implies that the incidence of litigation for securities fraud will be higher for those firms whose directors (particularly outside directors) hold multiple board appointments.