An Analysis of 'Little r' Restatements

50 Pages Posted: 11 Mar 2014 Last revised: 18 Nov 2014

See all articles by Christine E. L. Tan

Christine E. L. Tan

Fordham University - Gabelli School of Business

Susan M. Young

Fordham University

Date Written: November 1, 2014


“Little r” restatements occur when a firm’s immaterial errors accumulate to a material error in a given year. Unlike “Big R” restatements, which must be reported through an SEC 8-K material event filing, little r restatements do not require an 8-K form or a withdrawal of the auditor opinion. This paper documents this previously unexamined form of restatement and analyzes the characteristics of the firms who have used this method of correcting accounting errors over the period 2009 through 2012. We find that approximately 12 percent of the companies in our total sample have little r restatements. Contrary to concerns voiced by regulators and research agencies, we find in univariate tests, that little r firms are generally more profitable, have lower leverage and stronger corporate governance than Big R firms and do not significantly differ from non-revising firms. We also find that the majority of these firms do not include any discussion of why these little r’s occurred. Policy implications related to disclosure are discussed.

Keywords: restatement, materiality, revision, disclosure

JEL Classification: M41, M48, G38

Suggested Citation

Tan, Christine E. L. and Young, Susan M., An Analysis of 'Little r' Restatements (November 1, 2014). Fordham University Schools of Business Research Paper No. 2407659. Available at SSRN: or

Christine E. L. Tan

Fordham University - Gabelli School of Business ( email )

113 West 60th Street
Bronx, NY 10458
United States

Susan M. Young (Contact Author)

Fordham University ( email )

1790 Broadway
Suite 11-13
New York, NY 10019
United States
646.312.8245 (Phone)
646.312.8295 (Fax)

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