Audit Integrity Publishes List of 30 Companies Most Likely to be Sued by Shareholders

July 16, 2008 9:00 AM EDT

LOS ANGELES--(BUSINESS WIRE)--

Audit Integrity today announced the launch of the AGR Litigation Model 2.0, a newly upgraded version of its shareholder litigation risk assessment model, which is widely used by insurance companies and financial institutions to identify corporations at greatest risk of shareholder class action lawsuits.

The new Litigation Model 2.0 includes numerous enhancements which improve its performance by almost 10% from the prior model. Specifically, the Litigation Model 2.0 accurately identified nearly 70% of those companies sued over the past several years, with the riskiest 10% of companies in the Model having accounted for more than 40% of shareholder litigation.

In addition to using publicly available financial data along with historical instances of shareholder litigation, the leading factor within the Model is the proprietary Audit Integrity Accounting & Governance Risk (AGR(R)) rating, a measure of corporate integrity based on financial transparency and corporate governance, and an indicator of companies most at risk due to aggressive corporate behavior.

"Companies continue to put shareholders and other stakeholders at risk through aggressive or fraudulent behavior," said CEO Jack Zwingli. "Our clients rely on the AGR and the Litigation Model to provide an objective assessment of potential litigation risk. With AGR Litigation Model 2.0, we have improved the leading indicator of litigation risk, which can only help insurers and others identify companies most likely to be sued by shareholders."

The attached table shows the riskiest company in each major industry sector. Many well-known companies show the highest risk for litigation, due in part to their size and visibility. Some companies included on the list and their 1-year litigation probability (the likelihood of being sued by shareholders in the next 12 months) are Boeing (NYSE: BA) 5.6%; Ford Motor Company (NYSE: F) 4.1%; American International Group (NYSE: AIG) 9.8%; Genentech, Inc. (NYSE: DNA) 8.0%, and Cisco Systems, Inc. (NASD: CSCO) 8.3%.

A full copy of Audit Integrity's "The Audit Integrity Multi-Factor Litigation Model: The Market Leading Indicator of Class Action Lawsuits" is available at www.auditintegrity.com. Audit Integrity subscribers can access AGR Litigation Model rankings on 7,000 publicly traded corporations through website and data feed subscription.

About Audit Integrity

Audit Integrity is an independent research service firm that rates more than 7,000 public corporations for corporate integrity risk. These ratings are used by investors, insurers, auditors and corporate finance professionals. The ratings are available to investors at the Audit Integrity website and at Forbes.com. Detailed ratings with underlying metrics are available through direct feeds, Bloomberg and FactSet.

In addition to its flagship Accounting and Governance Risk (AGR) ratings, considered a proxy for corporate integrity, Audit Integrity also forecasts class action litigation risk, material financial restatement risk, and equity performance risk. The statistical correlation of these ratings with negative events and market returns has been confirmed by internal and third-party tests.

Audit Integrity was founded in 2002 and serves the financial and investment communities from offices in New York and Los Angeles. For more information, please visit www.auditintegrity.com.

 Litigation Model 2.0 - 30 Companies With Highest 1 Year Litigation
                              Probability
                         (By Industry Sector)

                              Healthcare
----------------------------------------------------------------------
                                                         Current  1
     Company Name        Market Cap       Industry         AGR    Year
                                                                  Prob
----------------------- ------------ ------------------- ------- -----
     Hologic, Inc.                   Medical Equipment &
                          $5,569.908       Supplies        29    11.6%
----------------------- ------------ ------------------- ------- -----
  Inverness Medical                   Biotechnology &
   Innovations, Inc.      $2,573.534        Drugs          41     8.9%
----------------------- ------------ ------------------- ------- -----
    Genentech, Inc.                   Biotechnology &
                         $73,772.600        Drugs          34     8.0%
----------------------- ------------ ------------------- ------- -----
                              Technology
----------------------------------------------------------------------
  Cisco Systems, Inc.                     Computer
                        $157,191.500     Peripherals       25     8.3%
----------------------- ------------ ------------------- ------- -----
 Symantec Corporation                    Software &
                         $17,664.950     Programming       18     8.0%
----------------------- ------------ ------------------- ------- -----
    QUALCOMM, Inc.                     Communications
                         $76,644.970      Equipment        25     8.0%
----------------------- ------------ ------------------- ------- -----
                              Financial
----------------------------------------------------------------------
UnitedHealth Group Inc.              Insurance (Accident
                         $41,087.860      & Health)        33    11.3%
----------------------- ------------ ------------------- ------- -----
American International               Insurance (Prop. &
      Group, Inc.        $97,065.780      Casualty)        37     9.8%
----------------------- ------------ ------------------- ------- -----
                                     Insurance (Accident
    WellPoint, Inc.      $27,150.760      & Health)        43     9.3%
----------------------- ------------ ------------------- ------- -----
                          Consumer Cyclical
----------------------------------------------------------------------
                                        Auto & Truck
  Ford Motor Company     $17,980.840    Manufacturers      29     4.1%
----------------------- ------------ ------------------- ------- -----
    General Motors                      Auto & Truck
      Corporation        $11,815.640    Manufacturers      40     3.9%
----------------------- ------------ ------------------- ------- -----
 Iconix Brand Group,
          Inc.              $788.101 Apparel/Accessories   32     3.7%
----------------------- ------------ ------------------- ------- -----
                               Services
----------------------------------------------------------------------
     CVS Caremark
      Corporation        $61,477.550   Retail (Drugs)      51     8.2%
----------------------- ------------ ------------------- ------- -----
      MGM MIRAGE         $14,490.170  Casinos & Gaming     46     7.7%
----------------------- ------------ ------------------- ------- -----
 Whole Foods Market,
          Inc.            $4,045.001  Retail (Grocery)     28     6.5%
----------------------- ------------ ------------------- ------- -----
                              Utilities
----------------------------------------------------------------------
 Dominion Resources,
          Inc.           $26,657.190 Electric Utilities    40     4.5%
----------------------- ------------ ------------------- ------- -----
  Mirant Corporation      $8,273.901 Electric Utilities    44     4.1%
----------------------- ------------ ------------------- ------- -----
                        Consumer/ Non-Cyclical
----------------------------------------------------------------------
                                       Beverages (Non-
 The Coca-Cola Company  $133,607.800      Alcoholic)          33  3.8%
----------------------- ------------ ------------------- ------- -----
 The Procter & Gamble                    Personal &
        Company         $204,122.600   Household Prods.       17  3.8%
----------------------- ------------ ------------------- ------- -----
  Altria Group, Inc.     $47,248.140       Tobacco            19  3.7%
----------------------- ------------ ------------------- ------- -----
                            Capitals Goods
----------------------------------------------------------------------
  The Boeing Company     $65,428.990 Aerospace & Defense      43  5.6%
----------------------- ------------ ------------------- ------- -----
 Goodrich Corporation     $8,418.790 Aerospace & Defense      40  5.1%
----------------------- ------------ ------------------- ------- -----
Rockwell Collins, Inc.   $10,657.240 Aerospace & Defense      48  4.5%
----------------------- ------------ ------------------- ------- -----
                            Transportation
----------------------------------------------------------------------
 Delta Air Lines, Inc.    $2,095.836       Airline            14  2.6%
----------------------- ------------ ------------------- ------- -----
                                           Misc.
 Kansas City Southern     $3,714.738    Transportation        14  1.7%
----------------------- ------------ ------------------- ------- -----
                                Energy
----------------------------------------------------------------------
                                     Oil Well Services &
   Noble Corporation     $17,802.860      Equipment           35  2.0%
----------------------- ------------ ------------------- ------- -----
     Marathon Oil                       Oil & Gas -
      Corporation        $37,832.520      Integrated          42  1.9%
----------------------- ------------ ------------------- ------- -----
 ENSCO International                 Oil Well Services &
      Incorporated       $10,685.920      Equipment           34  1.9%
----------------------- ------------ ------------------- ------- -----
                           Basic Materials
----------------------------------------------------------------------
Freeport-McMoRan Copper
      & Gold Inc.        $47,837.340    Metal Mining          44  1.5%
----------------------- ------------ ------------------- ------- -----
   Parker-Hannifin                    Misc. Fabricated
      Corporation        $14,330.940       Products           23  1.3%
----------------------- ------------ ------------------- ------- -----

Litigation Model 2.0 Methodology

At the root of Litigation Model 2.0 (and the company selection process) is the AGR rating, a proprietary factor which uncovers aggressive corporate practices with statistical links to shareholder litigation. In addition to AGR-based factors, Litigation Model 2.0 includes data on:

Company size - Larger, more visible companies attract more litigation

Industry sector - Volatile industries attract more litigation

Stock performance - Significant stock price declines are common precursors to shareholder litigation

The Audit Integrity Litigation Model 2.0 studies publicly available corporate data for evidence of aggressive practices and, without bias, calculates litigation probabilities based on links to real-world historical instances of shareholder litigation. Together, these factors are able to produce a highly effective and unique predictor of securities-based class action litigation.

    For additional information, please visit
http://www.auditintegrity.com/methodology.

AGR is a registered trademark of Audit Integrity Inc. FactSet is a registered trademark of FactSet Research Systems Inc.

Source: Audit Integrity

Related Categories

Press Releases

Stocks Mentioned

Add Your Comment

Name

Subject

Body

Verification can't see the text?
click here to refresh the image.
what's this?