Stock market reaction and adjustment speed to multiple announcements of accounting restatements

Kyung-Chun Mun ()
Additional contact information
Kyung-Chun Mun: Truman State University

Journal of Economics and Finance, 2022, vol. 46, issue 1, No 2, 22-67

Abstract: Abstract This paper investigates how investors react to multiple restatement announcements and how rapidly they adjust to the information content of the restatement when firms announce the restatement more frequently and the time lag from the prior announcement becomes lengthier. For our own purposes of analysis, overall investors are segmented into two groups: those responding positively and negatively to restatements. We find that investors making a positive initial response to restatements become less favorable to subsequent restatements, while those making a negative initial response become less negative to subsequent restatements. The restatement with a shorter (longer) time lag from the prior restatement is taken favorably (unfavorably) by both groups of investors alike. We also find evidence that investors responding positively to restatements tend to delay moderately the speed at which they adjust to information contained in the restatement after the restatement announcement, and the delay becomes lengthier as restatements are more frequently announced. In contrast, investors responding negatively tend to adjust more rapidly in the post-announcement period with an increasing number of restatements. Both groups of investors consistently adjust more quickly (more slowly) to the restatement with a shorter (longer) lag from the prior announcement.

Keywords: Multiple Restatements; Market Reaction; Adjustment Speed; M41; G39 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://link.springer.com/10.1007/s12197-021-09552-w Abstract (text/html)
Access to the full text of the articles in this series is restricted.

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:spr:jecfin:v:46:y:2022:i:1:d:10.1007_s12197-021-09552-w

Ordering information: This journal article can be ordered from
http://www.springer. ... cs/journal/12197/PS2

DOI: 10.1007/s12197-021-09552-w

Access Statistics for this article

Journal of Economics and Finance is currently edited by James Payne

More articles in Journal of Economics and Finance from Springer, Academy of Economics and Finance Contact information at EDIRC.
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().