Lawyer <scp>CEOs</scp> and Strategic Disclosure of Litigation Loss Contingencies

Using hand‐collected data, we find that lawyer CEOs, defined as CEOs with a legal education background, tend to make first disclosures about pending litigation cases on a timelier basis for litigation cases that end up with material losses than do non‐lawyer CEOs. However, for cases that result in immaterial losses, the presence of lawyer CEOs is not associated with optimistic claims. In contrast, lawyer CEOs are less likely to issue pre‐warnings prior to material settlements than non‐lawyer CEOs. We attribute the latter finding to the high perceived levels of disclosure proprietary costs in terms of ‘tipping one's hand’ to opposing counsels. These findings suggest that lawyer CEOs do not always exhibit conservative and risk‐averse disclosure styles.