The Spillover Effects of Restatement Tone for Industry Investment

68 Pages Posted: 20 Jul 2020

See all articles by Art Durnev

Art Durnev

University of Iowa - Henry B. Tippie College of Business

Claudine Mangen

Concordia University, Montreal - John Molson School of Business

Date Written: June 24, 2020

Abstract

This study explores the spillover effects of the tone of restatement press releases for the investments of rival firms. Our results show that changes in rivals’ investments after a restatement are significantly positively associated with the tone of restatement press releases, and that this association weakens over time as the restatements recede into the past. Moreover, we document that the association between changes in rivals’ investments and restatement tone varies cross-sectionally with how the restatement is framed, and with rivals’ corporate governance and financing mechanisms. Our study suggests that tone of restatement press releases provides information relevant for rivals’ investments.

Keywords: Restatements; Tone; Spillover Effects; Industry Investment

JEL Classification: G00

Suggested Citation

Durnev, Artyom and Mangen, Claudine, The Spillover Effects of Restatement Tone for Industry Investment (June 24, 2020). Available at SSRN: https://ssrn.com/abstract=3636313 or http://dx.doi.org/10.2139/ssrn.3636313

Artyom Durnev (Contact Author)

University of Iowa - Henry B. Tippie College of Business ( email )

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Claudine Mangen

Concordia University, Montreal - John Molson School of Business ( email )

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HOME PAGE: http://claudinemangen.com/

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