This paper examines the relationship between the timeliness of earnings disclosures and the expected costs of stockholder litigation. It finds that many lawsuits result from voluntary disclosures of adverse earnings news, but these disclosures are not timely, either in absolute terms or relative to similar disclosures that do not lead to litigation. Less timely disclosures result in larger lawsuit settlements. The study shows that the least-cost strategy for managers with bad earnings news is to disclose that news early. The paper provides evidence on the timing of voluntary disclosures that lead to stockholder litigation. It examines disclosure timeliness both in absolute terms and relative to a benchmark sample of disclosures that do not lead to litigation. It also provides evidence on the relationship between the timing of earnings disclosures and the consequences of stockholder litigation. Previous research on lawsuit filings does not provide evidence on the relationship between managers’ disclosure choices and litigation outcomes. The paper finds that a significant number of lawsuits result from voluntary earnings disclosures. Thus, voluntary disclosures of adverse earnings news do not preclude stockholder lawsuits. However, many of these "early" disclosures occur either late in the fiscal quarter or after the end of the fiscal quarter, making it difficult for managers to argue that they disclosed bad news in a timely manner. These disclosures occur two to three weeks later, on average, than otherwise similar disclosures that do not lead to litigation. Finally, some earnings disclosures associated with large stock price declines do not result in stockholder litigation. The difference between these disclosures and those that generate lawsuits appears to be timeliness: disclosures that lead to litigation occur, on average, seven trading days after those that do not. The paper also finds substantial variation in the outcomes of stockholder lawsuits: about one-quarter of the cases in the sample are dismissed, while the remaining lawsuits are settled for varying amounts. More importantly, these litigation outcomes are related to disclosure timing -- the magnitude of lawsuit settlements is negatively related to the timeliness of managers' disclosures, with later disclosures resulting in more costly lawsuit outcomes. This suggests that, even if a lawsuit occurs, managers can reduce the cost of this litigation by making more timely disclosures of adverse earnings news. Overall, the evidence suggests that the best strategy for managers with adverse earnings news is to disclose that news early. The paper provides legal background for the study and discusses previous research. It also presents the sample design, results, and concluding remarks.This paper examines the relationship between the timeliness of earnings disclosures and the expected costs of stockholder litigation. It finds that many lawsuits result from voluntary disclosures of adverse earnings news, but these disclosures are not timely, either in absolute terms or relative to similar disclosures that do not lead to litigation. Less timely disclosures result in larger lawsuit settlements. The study shows that the least-cost strategy for managers with bad earnings news is to disclose that news early. The paper provides evidence on the timing of voluntary disclosures that lead to stockholder litigation. It examines disclosure timeliness both in absolute terms and relative to a benchmark sample of disclosures that do not lead to litigation. It also provides evidence on the relationship between the timing of earnings disclosures and the consequences of stockholder litigation. Previous research on lawsuit filings does not provide evidence on the relationship between managers’ disclosure choices and litigation outcomes. The paper finds that a significant number of lawsuits result from voluntary earnings disclosures. Thus, voluntary disclosures of adverse earnings news do not preclude stockholder lawsuits. However, many of these "early" disclosures occur either late in the fiscal quarter or after the end of the fiscal quarter, making it difficult for managers to argue that they disclosed bad news in a timely manner. These disclosures occur two to three weeks later, on average, than otherwise similar disclosures that do not lead to litigation. Finally, some earnings disclosures associated with large stock price declines do not result in stockholder litigation. The difference between these disclosures and those that generate lawsuits appears to be timeliness: disclosures that lead to litigation occur, on average, seven trading days after those that do not. The paper also finds substantial variation in the outcomes of stockholder lawsuits: about one-quarter of the cases in the sample are dismissed, while the remaining lawsuits are settled for varying amounts. More importantly, these litigation outcomes are related to disclosure timing -- the magnitude of lawsuit settlements is negatively related to the timeliness of managers' disclosures, with later disclosures resulting in more costly lawsuit outcomes. This suggests that, even if a lawsuit occurs, managers can reduce the cost of this litigation by making more timely disclosures of adverse earnings news. Overall, the evidence suggests that the best strategy for managers with adverse earnings news is to disclose that news early. The paper provides legal background for the study and discusses previous research. It also presents the sample design, results, and concluding remarks.