Study Finds Link Between Aggressive Accounting, Non-Accounting Lawsuits

A bent toward aggressive accounting is a red flag for directors and officers insurers looking to spot future defendants in securities class actions--including those that have nothing to do with accounting restatements, according to a research group.

In fact, a report published by Criterion Research Group earlier this year found that the heaviest users of accounting accruals face four times more non-accounting securities class actions--those without any accounting allegations--than companies with the lowest levels of accruals on their financial statements.