Spread Behavior and Multiple Restatement Announcements

28 Pages Posted: 26 Aug 2009 Last revised: 31 Aug 2009

See all articles by Siddharth Shankar

Siddharth Shankar

Texas A&M International University

Suchi Mishra

Florida International University (FIU) - Department of Finance

Edward R. Lawrence

Florida International University (FIU) - Department of Finance

Arun J. Prakash

Florida International University (FIU) - Department of Finance; Florida International University

Date Written: August 26, 2009

Abstract

In this paper we study the multiple restatement announcements and its perceived resultant information asymmetry around the announcement day. We examine the pattern of information asymmetry for multiple restatement announcements in terms of bid-ask spread around the announcement day. Study of spread behavior around corporate events that have been performed in the past show a mixed picture. While Conrad and Niden (1992) find weak evidence of spread widening around corporate information event, Barclay and Smith (1988) find an increase in spread during stock repurchases announcements. Palmrose, Richardson and Scholz (2004) do not find any significant proportionate change in bid-ask spread surrounding the financial restatement announcement day. Results from our empirical analysis support the hypotheses that the spread widens not only around the first restatement announcement day but around every subsequent restatement announcement days as well.

Suggested Citation

Shankar, Siddharth and Mishra, Suchismita and Lawrence, Edward R. and Prakash, Arun Jai, Spread Behavior and Multiple Restatement Announcements (August 26, 2009). Available at SSRN: https://ssrn.com/abstract=1462238 or http://dx.doi.org/10.2139/ssrn.1462238

Siddharth Shankar (Contact Author)

Texas A&M International University ( email )

Laredo, TX 78041
United States

Suchismita Mishra

Florida International University (FIU) - Department of Finance ( email )

University Park
11200 SW 8th Street
Miami, FL 33199
United States

Edward R. Lawrence

Florida International University (FIU) - Department of Finance ( email )

University Park
11200 SW 8th Street
Miami, FL 33199
United States

Arun Jai Prakash

Florida International University (FIU) - Department of Finance ( email )

University Park
11200 SW 8th Street
Miami, FL 33199
United States

Florida International University ( email )

Miami, FL 33199
United States

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