The Changing Landscape of Auditor Litigation and Its Implications for Audit Quality

Data from 1996 to 2016 shows that shareholder litigation against auditors has declined in recent years. Empirical evidence shows that Rule 10b-5, the Securities Act statute used for class action lawsuits, has lost its bite for use against auditors. This decline is driven, at least in part, by the Supreme Court’s narrowing of liability standards. These findings suggest weakened shareholder protection with profound implications for investors.

from HBS Working Knowledge https://hbs.me/2VoWBvb