EconPapers    
Economics at your fingertips  
 

Earnings informativeness after financial statement restatements

Li Li Eng, Ramesh Rao () and Shahrokh Saudagaran

International Journal of Revenue Management, 2012, vol. 6, issue 3/4, 221-245

Abstract: Financial restatements may affect core earnings if the restatements involve revenue, cost of sales or ongoing expenses. Hence, restatements may impact information content of earnings. Using the earnings response coefficient (ERC) as a measure of the information content of earnings, we document a decline in ERCs in several quarters following the announcement of restatements. The decline in ERCs is especially evident in restatements that are unattributed to any source or attributed to the company, classified as fraud or no fraud, affect multiple accounts (pervasive) and more than one year. Overall, our results suggest that restatements that are especially severe cause investors to lose confidence in reported earnings and that these effects may persist for several quarters beyond the restatement.

Keywords: revenue management; earnings information content; financial restatements; earnings response coefficient; ERC; earnings management; fraud; earnings informativeness; financial statements. (search for similar items in EconPapers)
Date: 2012
References: Add references at CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
http://www.inderscience.com/link.php?id=50385 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ids:ijrevm:v:6:y:2012:i:3/4:p:221-245

Access Statistics for this article

More articles in International Journal of Revenue Management from Inderscience Enterprises Ltd
Bibliographic data for series maintained by Carmel O'Grady (). This e-mail address is bad, please contact .

 
Page updated 2020-05-01
Handle: RePEc:ids:ijrevm:v:6:y:2012:i:3/4:p:221-245