Document Type
Thesis
First Faculty Advisor
Cathy Zheng
Second Faculty Advisor
Charles Cullinan
Keywords
stock return; market reactions; restatement
Publisher
Bryant University
Rights Management
CC 4.0 BY-NC-ND
Abstract
This study analyzes the effect of restatement announcements in 8-K reports on stock returns. Using a sample of 274 financial misstatement announcement observations from 8-K reports, we find an average stock return of -10.38% in the quarter following the filing. Additionally, more pronounced negative returns are attributed to the misstatement of operating cash flow, cost of goods sold, and operating expenses. The results imply that the market reacts negatively to non-reliance on financial statements, and particularly the restatements of accounts that are related to the primary operations of the firm.
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