Financing activities after accounting restatements: an examination of SEOs and PIPEs

John, Kose; Shangguan, Joe Z.; Mateti, Ravi S.

doi:10.1007/s40822-015-0019-4

Cited by 2 publications

(2 citation statements)

References 28 publications

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“…Accounting restatements by companies indicate that their previously issued financial statements may be incomplete or unreliable, which may lead users of the misleading financial reports to make incorrect decisions (Flanagan et al, 2008). There is ample empirical evidence on the adverse consequences of financial misreporting, such as discounted market valuation, lower (higher) analysts' earnings forecasts accuracy (dispersion) , decline in the value relevance of accounting information (Anderson and Yohn, 2002;Wilson, 2008), decrease in the amount of net cash provided by financing activities (John et al, 2015), increase in the cost of equity capital (Hribar and Jenkins, 2004), larger bid-ask spreads (Anderson and Yohn, 2002;, credit ratings downgrade (Bierey and Schmidt, 2017) and loss of board seats (Street and Hermanson, 2019). Wilson (2008) argues that restatements raise concerns with the market's assessment of the quality of reported financial information.…”

Section: Introductionmentioning

confidence: 99%

Financial restatements and sell-side analysts' stock recommendations: evidence from Malaysia

Qasem

Aripin

Wan‐Hussin

2020

IJMF

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PurposeThe purpose of this paper is to examine the influence of financial restatements on the sell-side analysts' stock recommendations.Design/methodology/approachThe sample of this study is based on a dataset from a panel of 246 Malaysian public listed companies for the period 2008 to 2013 (651 company-year observations). This study employs feasible generalized least squares regression.FindingsThis study finds a negative and significant relationship between restated companies and sell-side analysts' stock recommendations, which means that sell-side analysts issue less favorable stock recommendations for restated companies.Practical implicationsThe findings based on observations from an emerging economy complement the results of the US studies that analysts revise their earnings forecasts or recommendations downwards or drop coverage following financial restatements. The results of this study should be useful to capital market participants in understanding how analysts perceive and evaluate restated companies.Originality/valueThis paper expands the literature on financial restatements consequences in an emerging market which is largely unstudied. Prior research on analyst behavior towards restatements has focused on the consequences of restatements in terms of analyst following and forecast accuracy and dispersion. This study examines if and how the restatements affect the analysts' final output as reflected in the recommendation opinion, an area that has so far received little attention.

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Section: Introductionmentioning

confidence: 99%

Financial restatements and sell-side analysts' stock recommendations: evidence from Malaysia

Qasem

Aripin

Wan‐Hussin

2020

IJMF

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“…The banks accounted for net cash flow from investing activities as the difference between cash receipts from the long-term assets retirement against the payments related to the long-term asset purchase (John et al, 2015). From an accounting standpoint, investing activities entail long-term asset acquisition, such as routing a loan and collecting it, as well as investing to buy and sell any productive assets that provide service for more than one year (Kieso et al, 2020).…”

Section: Cash Flow From Investing Activitiesmentioning

confidence: 99%

Cash Flows and Capital Adequacy Ratio of Indonesian Commercial Banks

Samryn,

Ismail,

Sudarmadji

et al. 2023

EJBMR

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This article examines the impact of partial Cash Flows from Operating Activities (CFO), Cash Flow from Investing Activities (CFI), and Cash Flow from Financing Activities (CFF) on the Capital Adequacy Ratio (CAR) of Indonesian commercial banks. The tests are conducted over a purposive population, sample, and unit of analysis of data from five years from 2009 to 2013 of the Big-Five commercial banks in the country. The period selection considered the banks’ response post-financial crisis in 2008. The classic assumption tests assumed that all data are valid for the simple regression to test each independent variable's correlation and effect on the dependent variable using EViewS econometric software. The test results show that all CF elements correlated negatively with CAR. The CFI shows a significant impact, while the CFO and CFF have insignificant implications on CAR. The conclusions imply that the parties should pay special attention to CFI, which significantly influences the CAR. This conclusion supports the CFI's central position as the source of long-term profit funded by the CFF. The finding indicated that post-crisis 2008, the Indonesian commercial banks improved their investment in long-term assets. The new long-term investment has not resulted in an additional cash flow and even depressed the net cash flow from investing activities. Given the necessity of banks to avoid idle funds, this study recommends future studies concerning the trade-off between CF decrease and the banks' profitability.

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Financing activities after accounting restatements: an examination of SEOs and PIPEs

Cited by 2 publications

References 28 publications

Financial restatements and sell-side analysts' stock recommendations: evidence from Malaysia

Financial restatements and sell-side analysts' stock recommendations: evidence from Malaysia

Cash Flows and Capital Adequacy Ratio of Indonesian Commercial Banks

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