The value relevence of earnings restatements — Empirical evidence from China

Abstract

This paper studies earnings restatements' value relevence of Chinese listed companies with the price model and returns model, using earnings restatements announcement listed companies from 1999 to 2009 as the samples. The results show that earnings restatements aren't value relevent in Chinese capital market. Market's reliance on earnings restatements information is minimal, and restatements can't influence investors' value judgments. But there are negative market reactions to noncore restatements. Therefore, we should give more attention to earnings restatements, and strengthen regulation and supervision of information disclosure of listed companies.