Determinants of Market Reactions to Restatement Announcements

By Zoe-Vonna Palmrose, Vernon J. Richardson, Susan Scholz. 2001

1,210 citations recorded by the source corpus.

Subfields: Accounting, Finance

View Paper: https://www.semanticscholar.org/paper/3aafa8e922710e686a75216a3cdc4a96c505067a

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In Accounting

1. Terry Shevlin
2. Weili Ge
3. Michelle Hanlon
4. Christopher S. Armstrong
5. David F. Larcker
6. Patricia M. Dechow
7. Catherine Schrand
8. Martin Walker

In Finance

1. Martin Walker
2. David F. Larcker
3. Christopher S. Armstrong
4. Weili Ge
5. Catherine Schrand
6. Patricia M. Dechow
7. Qiang Cheng
8. Terry Shevlin

Citations in the corpus

• Corporate Social Responsibility and Earnings Quality: International Evidence (2015, background): “and reputation in the market as well as among stakeholders (Badertscher, 2011; Desai et al., 2006; Palmrose et al., 2004).”
• Chief Executive Officer Equity Incentives and Accounting Irregularities (2010, background): “…we also restrict our restatement sample to the subsample of Glass-Lewis restatements that note revenue recognition, expense recognition, or concerns over reserves and allowances (Palmrose et al., 2004) and also note a material weakness, a late filing, an auditor change, or a restatement via 8-”
• The Balance Sheet as an Earnings Management Constraint (2002, background): “restatements of financial statements (Palmrose et al. 2001), Securities and Exchange Commission’s accounting enforcement actions (Feroz et al.”
• The Relation between Equity Incentives and Misreporting: The Role of Risk-Taking Incentives (2013, background): “Similarly, Palmrose et al. (2004) document an average marketadjusted return of –20% over a two-day announcement window for restatements associated with fraud, and Bardos et al. (2011) find that stock prices begin to decline several months in advance of the restatement announcement.”
• The Spread of Aggressive Corporate Tax Reporting: A Detailed Examination of the Corporate-Owned Life Insurance Shelter (2011, background): “22 Prior research shows that firms suffer significant negative market reaction when their financial misdeeds are revealed (Karpoff and Lott 1993; Dechow and Sweeney 1996; Palmrose et al. 2004).”
• Performance, Growth and Earnings Management (2006, result): “This is consistent with the evidence in Palmrose, Richardson, and Scholz (2004) , who document that the market return around restatements is positively related to the restated amount.”
• The market pricing of accruals quality (2005, background): “…previous research has documented severe economic consequences for earnings of sufficiently low quality as to attract SEC enforcement actions (Feroz et al., 1991; Dechow et al., 1996; Beneish, 1999), shareholder lawsuits (Kellogg, 1984; Francis et al., 1994), or restatements (Palmrose et al., 2004).”
• Admitting Mistakes: Home Country Effect on the Reliability of Restatement Reporting (2015, positive): “We define restatements related to accounting irregularities in two ways: restatements involving an external (SEC, DOJ) or internal (board of directors) investigation, and next based on ex ante classification as those involving core versus non-core items (Palmrose et al. 2004).”
• The Contagion Effects of Accounting Restatements (2008, positive): “2006) and are followed by shareholder litigation against the company, its management, board of directors, and external auditors (Griffin 2003; Palmrose and Scholz 2004), by a decline in sell-side analysts’ consensus annual EPS forecasts and an increase in forecast dispersion (Palmrose et al. 2004; H”