The Information Content of Earnings Following Restatements PDF Download

Author: Wendy M. Wilson
Publisher:
ISBN:
Category :
Languages : en
Pages : 53

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Book Description
This paper examines the information content of earnings following restatements of prior period earnings. Results indicate that the information content of earnings announcements declines in periods following a restatement, but that the loss of information content is temporary. In particular, the earnings response coefficients for earnings announcements surrounding a restatement exhibit a U-shaped pattern in which they return to pre-restatement levels over an average of four quarters, suggesting that the market's concern regarding subsequently reported earnings is somewhat transitory. The extent to which the earnings of restatement firms suffer a loss of information content varies across several dimensions. First, the loss of information content is greater for firms that restate earnings to correct revenue recognition errors than it is for other types of restatements. Second, the information content of earnings is significantly lower for firms that do not make changes to their financial reporting governance structure following a restatement relative to firms that initiate governance changes. Overall, the evidence presented in this paper is consistent with a short-term decline in investor confidence regarding financial reporting following restatements, but that recovery typically takes place within four quarters.

Author: Wendy M. Wilson
Publisher:
ISBN:
Category :
Languages : en
Pages :

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Regulatory officials and market analysts have speculated that the loss of credibility in subsequently reported financial information is a long-lasting consequence of earnings restatements. I measure the information content of earnings using a standard earnings-returns framework over several years surrounding restatements to examine characteristics of the decline in the information content of earnings. Results indicate that although the information content of earnings declines following restatements, the loss is temporary. In particular, the earnings response coefficients for earnings announcements surrounding restatements exhibit a U-shaped pattern in which they are no longer significantly lower in the post-restatement period over an average of four quarters. The extent to which the earnings of restatement firms suffer a loss of information content varies across several dimensions. First, the duration of the loss is greater for firms that restate earnings to correct revenue recognition errors and for restatements that result in a large decline in the stock price at the announcement date. Second, there is not a loss in the information content of earnings for firms that make changes to their financial reporting governance structures following restatements. Overall, the evidence in this paper is consistent with a short-term decline in investor confidence regarding financial reporting following restatements, but shows that suspicion regarding the information loss of post-restatement earnings in the long-term is unwarranted.

Author: Xia Chen
Publisher:
ISBN:
Category :
Languages : en
Pages : 52

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Prior research finds that the decline in the information content of earnings after restatement announcements is short-lived and the earnings response coefficient (ERC) bounces back after three quarters. We re-examine this issue using a more recent and comprehensive sample of restatements. We find that material restatement firms experience a significant decrease in the ERC over a prolonged period - close to three years after restatement announcements. In contrast, other restatement firms experience a decline in the ERC for only one quarter. We further find that among material restatement firms, those that are subject to more credibility concerns and those that do not take prompt actions to improve reporting credibility experience a longer drop in the ERC. Lastly, reconciling with prior research, we find that using a more powerful proxy for material restatements and imposing less restrictive sampling requirements help increase the power of the tests to detect the long-run drop in the ERC.

Author: Kirsten L. Anderson
Publisher:
ISBN:
Category :
Languages : en
Pages : 30

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Restating 10-Ks has become an increasingly common phenomenon in financial reporting. Restatements clearly signal that the firm's prior financial statements were not credible and were of relatively lower quot;qualityquot;. In this study, we examine the effect of restatements on investors' and dealers' perceptions of the firm. First, we examine the market returns and the bid-ask spread effects at the announcement of the accounting problem that leads to restatement. We find negative market returns for accounting problem announcements, and we find that the negative reaction is most pronounced for firms with revenue recognition issues. We also find an increase in spreads surrounding the announcement of revenue recognition problems. Second we examine returns and spreads from the announcement of the restatement to the filing of the restated financial statements. We find a significant negative market reaction and a larger negative reaction for firms with revenue recognition problems. We find no change in spreads from before the announcement of the accounting problem to after the restatement is filed. Finally, we examine the effect of the restatement on earnings response coefficients, and find that the market reacts less to earnings after a restatement than to earnings prior to a restatement. In general, these results indicate that investors and dealers react negatively to restatements and are more concerned with revenue recognition problems than with other financial reporting errors.

Author: A. Gunasekaran
Publisher: World Scientific
ISBN: 9812836063
Category : Business & Economics
Languages : en
Pages : 961

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Pt. I. Health care information systems. ch. 1. Healthcare supply chain information systems VIA service-oriented architecture / Sultan N. Turhan and Özalp Vayvay. ch. 2. The role of the CIO in the development of interoperable information systems in healthcare organizations / António Grilo [und weitere]. ch. 3. Information systems for handling patients' complaints in health organizations / Zvi Stern, Elie Mersel and Nahum Gedalia. ch. 4. How to develop quality management system in a hospital / Ville Tuomi -- pt. II. Business process information systems. ch. 5. Modeling and managing business processes / Mohammad El-Mekawy, Khurram Shahzad and Nabeel Ahmed. ch. 6. Business process reengineering and measuring of company operations efficiency / Natas̮a Vujica Herzog. ch. 7. Value chain re-engineering by the application of advanced planning and scheduling / Yohanes Kristianto, Petri Helo and Ajmal Mian. ch. 8. Cultural auditing in the age of business : multicultural logistics management, and information systems / Alberto G. Canen and Ana Canen. ch. 9. Efficiency as criterion for typification of the dairy industry in Minas Gerais state / Luiz Antonio Abrantes [und weitere]. ch. 10. A neurocybernetic theory of social management systems / Masudul Alam Choudhury. ch. 11. Systematization approach for exploring business information systems : management dimensions / Albena Antonova. ch. 12. A structure for knowledge management systems assessment and audit / Joao Pedro Albino, Nicolau Reinhard and Silvina Santana. ch. 13. Risk management in enterprise resource planning systems introduction / Davide Aloini, Riccardo Dulmin and Valeria Mininno -- pt. III. Industrial data and management systems. ch. 14. Asset integrity management : operationalizing sustainability concerns / R.M. Chandima Ratnayake. ch. 15. How to boost innovation culture and innovators? / Andrea Bikfalvi [und weitere]. ch. 16. A decision support system for assembly and production line balancing / A.S. Simaria [und weitere]. ch. 17. An innovation applied to the simulation of RFID environments as used in the logistics / Marcelo Cunha De Azambuja [und weitere]. ch. 18. Customers' acceptance of new service technologies : the case of RFID / Alessandra Vecchi, Louis Brennan and Aristeidis Theotokis. ch. 19. Operational efficiency management tool placing resources in intangible assets / Claudelino Martins Dias Junior, Osmar Possamai and Ricardo Goncalves. ch. 20. Interactive technology maps for strategic planning and research directions based on textual and citation analysis of patents / Elisabetta Sani, Emanuele Ruffaldi and Massimo Bergamasco. ch. 21. Determining key performance indicators : an analytical network approach / Daniela Carlucci and Giovanni Schiuma -- pt. IV. Strategic business information systems. ch. 22. The use of information technology in small industrial companies in Latin America - the case of the interior of Sao Paulo, Brazil / Otávio José De Oliveira and Guilherme Fontana. ch. 23. Technology : information, business, marketing, and CRM management / Fernando M. Serson. ch. 24. Transfer of business and information management systems : issues and challenges / R. Nat Natarajan. ch. 25. Toward digital business ecosystem analysis / Aurelian Mihai Stanescu [und weitere]. ch. 26. The dynamics of the informational contents of accounting numbers / Akinloye Akindayomi -- pt. V. Information systems in supply chain management. ch. 27. Supply chain enabling technologies : management challenges and opportunities / Damien Power. ch. 28. Supply chain management / Avninder Gill and M. Ishaq Bhatti. ch. 29. Measuring supply chain performance in SMES / Maria Argyropoulou [und weitere]. ch. 30. Information sharing in service supply chain / Sari Uusipaavalniemi, Jari Juga and Maqsood Sandhu. ch. 31. RFID applications in the supply chain : an evaluation framework / Valerio Elia, Maria Grazia Gnoni and Alessandra Rollo -- pt. VI. Tools for the evaluation of business information systems. ch. 32. Tools for the decision-making process in the management information system of the organization / Carmen De Pablos Heredero and Mónica De Pablos Heredero. ch. 33. Preliminaries of mathematics in business and information management / Mohammed Salem Elmusrati. ch. 34. Herding does not exist or just a measurement problem? A meta-analysis / Nizar Hachicha, Amina Amirat and Abdelfettah Bouri. ch. 35. Object-oriented metacomputing with exertions / Michael Sobolewski. ch. 36. A new B2B architecture using ontology and web services technology / Youcef Aklouf. ch. 37. The roles of computer simulation in supply chain management / Jia Hongyu and Zuo Peng

Author: Ojo, Marianne
Publisher: IGI Global
ISBN: 1522519017
Category : Business & Economics
Languages : en
Pages : 334

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Book Description
Among banking industries and insurance and security sectors, systemic risk and information uncertainty can generate negative consequences. By developing solutions to address such issues, financial regulation initiatives can be optimized. Value Relevance of Accounting Information in Capital Markets is an essential reference source for the latest scholarly research on the importance of information asymmetries and uncertainties and their effects on the overall regulation of financial industries. Featuring extensive coverage on a wide range of perspectives, such as financial reporting standards, investor confidence, and capital flows, this publication is ideally designed for professionals, accountants, and academics seeking current research on the effects of the underlying elements in investing.

Author: Xin Xu
Publisher:
ISBN:
Category : Accounting
Languages : en
Pages : 266

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Author: Ershi Qi
Publisher: Springer Science & Business Media
ISBN: 3642400604
Category : Business & Economics
Languages : en
Pages : 1039

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Book Description
The purpose of the 4th International Asia Conference on Industrial Engineering and Management Innovation (IEMI 2013) is to bring together researchers, engineers and practitioners interested in the application of informatics to usher in new advances in the industrial engineering and management fields.

Author: Carol Alexander
Publisher: John Wiley & Sons
ISBN: 1394178158
Category : Business & Economics
Languages : en
Pages : 624

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Book Description
Identifying malpractice and misconduct should be top priority for financial risk managers today Corruption and Fraud in Financial Markets identifies potential issues surrounding all types of fraud, misconduct, price/volume manipulation and other forms of malpractice. Chapters cover detection, prevention and regulation of corruption and fraud within different financial markets. Written by experts at the forefront of finance and risk management, this book details the many practices that bring potentially devastating consequences, including insider trading, bribery, false disclosure, frontrunning, options backdating, and improper execution or broker-agency relationships. Informed but corrupt traders manipulate prices in dark pools run by investment banks, using anonymous deals to move prices in their own favour, extracting value from ordinary investors time and time again. Strategies such as wash, ladder and spoofing trades are rife, even on regulated exchanges – and in unregulated cryptocurrency exchanges one can even see these manipulative quotes happening real-time in the limit order book. More generally, financial market misconduct and fraud affects about 15 percent of publicly listed companies each year and the resulting fines can devastate an organisation's budget and initiate a tailspin from which it may never recover. This book gives you a deeper understanding of all these issues to help prevent you and your company from falling victim to unethical practices. Learn about the different types of corruption and fraud and where they may be hiding in your organisation Identify improper relationships and conflicts of interest before they become a problem Understand the regulations surrounding market misconduct, and how they affect your firm Prevent budget-breaking fines and other potentially catastrophic consequences Since the LIBOR scandal, many major banks have been fined billions of dollars for manipulation of prices, exchange rates and interest rates. Headline cases aside, misconduct and fraud is uncomfortably prevalent in a large number of financial firms; it can exist in a wide variety of forms, with practices in multiple departments, making self-governance complex. Corruption and Fraud in Financial Markets is a comprehensive guide to identifying and stopping potential problems before they reach the level of finable misconduct.

Author: Joshua Ronen
Publisher: Springer Science & Business Media
ISBN: 0387257713
Category : Business & Economics
Languages : en
Pages : 587

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Book Description
This book is a study of earnings management, aimed at scholars and professionals in accounting, finance, economics, and law. The authors address research questions including: Why are earnings so important that firms feel compelled to manipulate them? What set of circumstances will induce earnings management? How will the interaction among management, boards of directors, investors, employees, suppliers, customers and regulators affect earnings management? How to design empirical research addressing earnings management? What are the limitations and strengths of current empirical models?