Abstract

http://ssrn.com/abstract=2065892
 
 

Citations (1)



 


 



Admitting Mistakes: Home Country Effect on the Reliability of Restatement Reporting


Suraj Srinivasan


Harvard Business School

Aida Sijamic Wahid


University of Toronto - Rotman School of Management

Gwen Yu


Harvard Business School

May 23, 2012


Abstract:     
We study the frequency of restatements by foreign firms listed on the U.S. exchanges. We find that the restatement rate by U.S. listed foreign firms is significantly lower than that of comparable U.S. firms and the difference depends on the home country characteristics of the foreign firm. Foreign firms from countries with a weak rule of law are less likely to restate than firms from strong rule of law countries are, despite companies from the weaker rule of law countries having higher levels of earnings management. After controlling for the materiality of the restatement, firms from weak rule of law countries are more likely to opt for less visible restatement disclosure methods. We interpret these findings as home country enforcement affecting firms’ likelihood of reporting existing accounting irregularities. This suggests that for U.S. listed foreign firms, less frequent restatements can be a signal of opportunistic reporting rather than high quality earnings.

Number of Pages in PDF File: 53

working papers series


Download This Paper

Date posted: May 25, 2012  

Suggested Citation

Srinivasan, Suraj and Wahid, Aida Sijamic and Yu, Gwen, Admitting Mistakes: Home Country Effect on the Reliability of Restatement Reporting (May 23, 2012). Available at SSRN: http://ssrn.com/abstract=2065892 or http://dx.doi.org/10.2139/ssrn.2065892

Contact Information

Suraj Srinivasan
Harvard Business School ( email )
Soldiers Field
Boston, MA 02163
United States
HOME PAGE: http://drfd.hbs.edu/fit/public/facultyInfo.do?facInfo=pub&facId=10700
Aida Sijamic Wahid
University of Toronto - Rotman School of Management ( email )
105 St. George Street
Toronto, Ontario M5S 3E6
Canada

Gwen Yu (Contact Author)
Harvard Business School ( email )
Soldiers Field Road
Morgan 383
Boston, MA 02163
United States
Feedback to SSRN


Paper statistics
Abstract Views: 1,004
Downloads: 250
Download Rank: 67,045
Citations:  1

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo2 in 0.578 seconds