Does Company Reputation Matter for Financial Reporting Quality? Evidence from Restatements

Cao, Ying; Myers, Linda A.; Omer, Thomas C.

doi:10.2139/ssrn.1317343

Cited by 81 publications

(153 citation statements)

References 116 publications

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“…Do investors react differently to restatements announced by family-controlled firms and those by nonfamily-controlled firms? 2 We focus on accounting restatements not only because the unprecedented number of accounting restatements have caused great concern among regulators and other market participants, but also because restatement is one of the most visible forms of low-quality accounting information (Cao, Myers, & Omer, 2012) and there is no need for researchers to use a model to identify low-quality firms (Dechow, Ge, & Schrand, 2010).…”

Section: Introductionmentioning

confidence: 99%

Family Control, Accounting Misstatements, and Market Reactions to Restatements: Evidence from China

Tian

2014

SSRN Journal

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We examine the impact of family control on the likelihood of accounting misstatements and on market reactions to subsequent restatements. Using a matched-firm approach, we find that family control overall reduces the incidence of misstatements, consistent with the notion that controlling families have a greater concern for reputation than nonfamily blockholders. However, compared to nonfamily firm restatements, restatements announced by family-controlled firms trigger significantly more negative market reactions. We attribute the more negative market reactions to the greater loss in reputation and higher investor scepticism of the credibility of corporate insiders for family firms than for nonfamily firms following restatements. Disciplines Business Publication DetailsMa, L., Ma, S. & Tian, G. G. (2016) We examine the impact of family control on the likelihood of accounting misstatements and on market reactions to subsequent restatements. Using a matched-firm approach, we find that family control overall reduces the incidence of misstatements, consistent with the notion that controlling families have a greater concern for reputation than nonfamily blockholders.However, compared to nonfamily firm restatements, restatements announced by familycontrolled firms trigger significantly more negative market reactions. We attribute the more negative market reactions to the greater loss in reputation and higher investor scepticism of the credibility of corporate insiders for family firms than for nonfamily firms following restatements.

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Section: Introductionmentioning

confidence: 99%

Family Control, Accounting Misstatements, and Market Reactions to Restatements: Evidence from China

Tian

2014

SSRN Journal

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“…Ocorre que essas republicações têm efeitos adversos relevantes sobre o valor de mercado, custo de capital e reputação da empresa (Cao, Myers, & Omer, 2012;Palmrose, Richardson, & Scholz, 2004), logo, elas envidarão esforços para mitigarem esses riscos, pois os custos para a reconstrução da reputação são maiores, inclusive para os auditores (Kryzanowski & Zhang, 2013;Francis, Michas e Yu, 2013). Entretanto, as evidências encontradas sustentam de forma mais persistente que quanto maior as empresas, maior será a probabilidade de republicação (Schrand & Zechman, 2012;Chen, Cheng & Lo, 2013;Cao, Feroz & Davalos, 2015;Agrawal & Copper, 2015;Baber et al, 2015).…”

Section: Hipótese Dos Custos Políticosunclassified

“…De um lado trata-se de uma proxy de maior (ou menor) qualidade da informação contábil com os problemas associados (Dechow, Ge, & Schrand, 2010). Por exemplo, Cao, Myers & Omer (2012) destacam que as republicações têm efeito nefasto sobre a reputação empresarial, podendo reduzir o valor da empresa, aumentar o custo do capital, iniciar processos de execução e falência, entre outros. Chen, Elder & Hung (2014) destacam que a o mercado reage negativamente às republicações, fazendo com que informações posteriores divulgadas pelas empresas percam credibilidade.…”

Section: Reapresentação Das Demonstrações Contábeis: Conceitos E Implunclassified

“…Primeiro que empresas com maiores taxas de crescimento estarão mais sujeitas a republicação (Young & Peng, 2012;Baber et al, 2015). Por outro lado, as empresas com maiores desempenhos (ROA) terão incentivos para não republicarem (Cao, Myers, & Omer, 2012;Chen, Elder, & Hung, 2014;Masulis, Wang, & Xie, 2012). Os resultados do estudo demonstraram exatamente o que se esperava.…”

Section: Incentivos à Republicação Das Demonstraçõesunclassified

“…Primeiro que existe uma concentração dessas empresas entre as empresas listadas isso pode fazer com que o crescimento das republicações se associem a esse tipo de auditor, entretanto, mesmo no período de adoção da SOX que houve redução das republicações, o resultado quanto aos auditores foi de aumento. Como tratam-se em sua maioria de republicações espontâneas (Marques, 2016), esses resultados podem sinalizar maior nível de transparência por parte das empresas (Cao, Myers, & Omer, 2012).…”

Section: Incentivos à Republicação Das Demonstraçõesunclassified

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Concern about climate change has increased the pressure on firms to be accountable for social impact and to report on environmental, social and governance (ESG) performance. Focusing on the view that sustainability-oriented firms are likely to consider wider stakeholder interests and pursue high financial reporting integrity, this paper examines the association between carbon assurance and earnings management.Using a sample of firms listed on the New York Stock Exchange, we find voluntary adoption of carbon assurance (level), carbon disclosure and gender diverse boards are negatively associated with earnings management. Additional tests using different components of carbon assurance (percent and verification) confirm our main results.Our results suggest that firms that voluntarily invest in carbon assurance, carbon disclosure and gender diverse boards are less likely to engage in earnings management and thus have higher reporting integrity. This aligns with the view that firms' ethical concerns translate into higher quality reporting.

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Does Company Reputation Matter for Financial Reporting Quality? Evidence from Restatements

Cited by 81 publications

References 116 publications

Family Control, Accounting Misstatements, and Market Reactions to Restatements: Evidence from China

Family Control, Accounting Misstatements, and Market Reactions to Restatements: Evidence from China

Determinantes das Republicações no Mercado Brasileiro: Uma Análise a partir dos Incentivos ao Gerenciamento de Resultados

Climate change mitigation: Carbon assurance and reporting integrity

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