This article was posted on 20 August on SSRN; you can access it here. Coincidentally, on the same date, IP Finance hosted this piece by Janice Denoncourt which mentions the question of the non-reporting of litigation risk. Presumably the nature of the risk -- and the value of disclosure in corporate reporting or in equity research reports -- will not be the same where registered rights such as patents are concerned as where unregistered rights such as copyright or confidential information are concerned, since the existence of registered rights is at least detectable, even if their immediate relevance isn't, while possibly infringed unregistered rights are an unknown unknown.
We found that the overwhelming majority of the equity research reports did not mention copyright infringement as a possible risk factor. None of the 14 reports for Reed Elsevier and 18 reports for Pearson identified copyright infringement as a risk factor. Only 13% of the 15 reports for Sony and 22% of the 23 reports for Vivendi mentioned copyright infringement as a potential risk. Just 8% of the 26 reports for Viacom and 27% of the 26 reports for Disney referred to copyright infringement as a risk factor. 26% of the 19 reports concerning Adobe and 41% of the 27 reports concerning Microsoft identified copyright infringement as a risk factor. Cumulatively, only 19% (32) of the 168 reports referred to copyright infringement as a possible risk; 81% did not.
Thank you, Chris Torrero, for the link.