Determinants of Market Reactions to Restatement Announcements

Palmrose, Zoe‐Vonna; Richardson, Vernon J.; Scholz, Susan

doi:10.2139/ssrn.265009

Cited by 740 publications

(539 citation statements)

References 28 publications

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“…Our first finding is similar in spirit to a large literature in finance, which reports negative market reaction to a wide array of corporate changes. For example, Palmrose (2004) find that the market reaction to earnings restatements, even ones that appear to improve transparency, is uniformly negative [1], and Graham (2008) find that the reaction of the bond market to earning restatements is always negative [2]. Thus, similar to what we document, the market seems to be skeptical of any alteration to previously provided information.…”

Section: Introductionsupporting

confidence: 74%

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Stock market response to changes in movies’ opening dates - Based on the Empirical Analysis of China's domestic listed film company

Wang¹

2017

Topics in Economics, Business and Management (EBM)

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With the rapid development of the Chinese securities market, there is more and more discussion about the change of the public company. We analyze stock market reactions to information about changes in opening dates of movies. The purpose of this paper is to discuss the explanatory power of the change announcement information to the stock market reaction. Empirical results show that China's film industry is different from the American film industry's interpretation of stock performance in terms of changing public information. China's stock market is not sensitive to film production cost, and there is no significant market reaction.

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Section: Introductionsupporting

confidence: 74%

“…Palmrose. (2004) find that the market reaction to earnings restatements, even ones that appear to improve transparency, is uniformly negative [1], and Graham. (2008) find that the reaction of the bond market to earning restatements is always negative [2].…”

Section: Literature Reviewmentioning

confidence: 99%

Stock market response to changes in movies’ opening dates - Based on the Empirical Analysis of China's domestic listed film company

Wang¹

2017

Topics in Economics, Business and Management (EBM)

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“…Prior studies have found that there is a significant negative market response to the announcement of financial restatements (Feroz, Park, and Pastena, 1991;Owers, Lin, and Rogers, 2002;Palmrose, Richardson, and Scholz, 2004). In addition, prior research has shown that restatements can damage the reputations of the firm's top executives and board members.…”

Section: Ceo and Prior Financial Restatementmentioning

confidence: 99%

Stock market reaction to CEO certification: the signaling role of CEO background

Zhang¹,

Wiersema²

2009

Strategic Management Journal

334

213

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“…Previous studies show that the disclosures of earnings restatement are related to large market value losses. For example, Palmrose, Richardson, and Scholz (2004) report a -9.2% of market return loss over a two-day (0,1) of restatement announcement period, and Hribar and Jenkins (2004) find that the cost of capital rises after restatements. Moreover, Gleason et al (2008) explore the industry contagion effect of earning restatements from the investor's perspective, and find that when a firm restates, the peer firms in the same industry also experience stock price declines.…”

Section: Prior Research and Backgroundmentioning

confidence: 99%

Board Interlocks and Earnings Management Contagion

2010

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We examine whether earnings management spreads from firm to firm via board connections. We find that contagion of accounting quality occurs via directors in interlocking boards with other firms. A firm with director links to firms that restated earnings tends to have poorer accounting quality and higher likelihood of restating its own financial reports. A firm with director links to firms that did not restate earnings tends to have higher accounting quality. This evidence supports the idea that economic behavior such as accruals management spreads through social networks.

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Determinants of Market Reactions to Restatement Announcements

Cited by 740 publications

References 28 publications

Stock market response to changes in movies’ opening dates - Based on the Empirical Analysis of China's domestic listed film company

Stock market response to changes in movies’ opening dates - Based on the Empirical Analysis of China's domestic listed film company

Stock market reaction to CEO certification: the signaling role of CEO background

Board Interlocks and Earnings Management Contagion

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