Abstract

http://ssrn.com/abstract=1091475
 
 

References (116)



 
 

Citations (21)



 


 



Corporate Investments: Learning from Restatements


Art Durnev


University of Iowa - Henry B. Tippie College of Business

Claudine Mangen


Concordia University, Montreal - John Molson School of Business

October 15, 2008


Abstract:     
This study analyzes the information conveyed by the restatements of financial reports. We argue that restatements contain news about the investment projects of the restating firms' competitors. This news causes competitors to revise their beliefs about the projects' value, and to modify their subsequent investment decisions. Accordingly, we hypothesize that changes in competitors' investments after restatement announcements are related to news in the restatements. Consistent with our prediction, we find that changes in competitors' investments following restatement announcements are significantly related to various proxies for news in the restatements, such as competitors' and restating firms' abnormal returns at the restatement announcements. We conclude that restatements convey information about the investment projects of restating firms' competitors.

Number of Pages in PDF File: 53

Keywords: restatements, investment efficiency

JEL Classification: G31

working papers series


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Date posted: March 29, 2008 ; Last revised: November 6, 2008

Suggested Citation

Durnev, Art and Mangen, Claudine, Corporate Investments: Learning from Restatements (October 15, 2008). Available at SSRN: http://ssrn.com/abstract=1091475 or http://dx.doi.org/10.2139/ssrn.1091475

Contact Information

Artyom Durnev (Contact Author)
University of Iowa - Henry B. Tippie College of Business ( email )
108 Pappajohn Business Building
Iowa City, IA 52242-1000
United States
(514) 398-5394 (Phone)
(514) 398-3876 (Fax)
HOME PAGE: http://www.artdurnev.com
Claudine Mangen
Concordia University, Montreal - John Molson School of Business ( email )
1450 Guy Street
Montreal, Quebec H3H 0A1
Canada
+ 1(514) 848 24 24 2747 (Phone)
+1 (514) 848 45 18 (Fax)
HOME PAGE: http://jmsb.concordia.ca/~cmangen/
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