Financial Restatements: Trends, Reasons for Occurrence, and Consequences - A Survey of the Literature

59 Pages Posted: 25 Aug 2018

See all articles by Soenke Sievers

Soenke Sievers

University of Paderborn - Faculty of Business Administration, Economics and Business Computing

Christian Sofilkanitsch

University of Paderborn

Date Written: August 13, 2018

Abstract

This state-of-the-art paper summarizes findings on restatement papers mainly covering years 2001 to 2017. Our review provides a comprehensive picture on financial restatement research mainly for U.S., its trends, reasons for occurrence, and consequences for affected parties (e.g., investors, auditors). Furthermore, we outline reputation-rebuilding measures undertaken after a restatement and their effect on the information content of earnings. Moreover, the scope, versatility, and universality of restatements as a single proxy for financial reporting and audit quality are presented. We carefully illustrate nuances in restatement types. Overall, this paper aims at helping institutional standard setters understanding the meaning of an increase in restatements and giving shareholders an insight on the severity of various corrections. Finally, researchers learn about chances and limitations when financial restatements are applied as an alternate proxy for low financial reporting and low audit quality.

Keywords: survey, financial restatement, firm value, cost of equity, auditing

JEL Classification: G1, K4, M4

Suggested Citation

Sievers, Soenke and Sofilkanitsch, Christian, Financial Restatements: Trends, Reasons for Occurrence, and Consequences - A Survey of the Literature (August 13, 2018). Available at SSRN: https://ssrn.com/abstract=3231740 or http://dx.doi.org/10.2139/ssrn.3231740

Soenke Sievers

University of Paderborn - Faculty of Business Administration, Economics and Business Computing ( email )

Warburger Str. 100
D-33098 Paderborn
Germany

Christian Sofilkanitsch (Contact Author)

University of Paderborn ( email )

Warburger Str. 100
Paderborn, D-33098
Germany

Register to save articles to
your library

Register

Paper statistics

Downloads
123
rank
215,995
Abstract Views
401
PlumX Metrics