TY - JOUR
T1 - Do post-restatement firms care about financial credibility? Evidence from the pre- and post-SOX eras
AU - Chen, Ken Y.
AU - Elder, Randal J.
AU - Hung, Shengmin
N1 - Funding Information:
We appreciate helpful comments from Dan Dhaliwal, Ferdinard Gul, Clive Lennox, Teri Yohn (discussant), Taychang Wang, Dan Weiss (discussant), participants at 2009 International Symposium on Audit Research, and at 2009 American Accounting Association annual meeting. Ken Y. Chen gratefully acknowledges the financial support of the National Science Council, Taiwan (Project No. NSC 98-2410-H-002-086-M2).
PY - 2014/3
Y1 - 2014/3
N2 - This study examines whether negative-market-reaction firms in the year following restatement announcements adopt more conservative financial reporting to respond to their financial reporting credibility crisis, especially in the post-SOX era. Using Basu's (1997) measure of conservatism, we find that negative-market-reaction firms in the year following restatement announcements report their financial statements more conservatively in the post-SOX era, as the market reaction following restatement announcements becomes more severe. We also find that as the negative market restatement reaction becomes more severe, negative-market-reaction firms using a Big N auditor in the year following financial restatements report their financial statements more conservatively in the post-SOX era.
AB - This study examines whether negative-market-reaction firms in the year following restatement announcements adopt more conservative financial reporting to respond to their financial reporting credibility crisis, especially in the post-SOX era. Using Basu's (1997) measure of conservatism, we find that negative-market-reaction firms in the year following restatement announcements report their financial statements more conservatively in the post-SOX era, as the market reaction following restatement announcements becomes more severe. We also find that as the negative market restatement reaction becomes more severe, negative-market-reaction firms using a Big N auditor in the year following financial restatements report their financial statements more conservatively in the post-SOX era.
UR - http://www.scopus.com/inward/record.url?scp=84897573299&partnerID=8YFLogxK
UR - http://www.scopus.com/inward/citedby.url?scp=84897573299&partnerID=8YFLogxK
U2 - 10.1016/j.jaccpubpol.2013.12.002
DO - 10.1016/j.jaccpubpol.2013.12.002
M3 - Article
AN - SCOPUS:84897573299
SN - 0278-4254
VL - 33
SP - 107
EP - 126
JO - Journal of Accounting and Public Policy
JF - Journal of Accounting and Public Policy
IS - 2
ER -