The Contagion Effects of Accounting Restatements

Gleason, Cristi A.; Jenkins, Nicole Thorne; Johnson, W. Bruce

doi:10.2139/ssrn.591689

Cited by 154 publications

(252 citation statements)

References 57 publications

Supporting

Mentioning

228

Contrasting

Unclassified

Order By: Relevance

“…In the second model, the same change in auditor competition results in a 16.4 percent increase in the likelihood of a restatement that impacts the financial statements negatively. 20 Given the substantial costs associated with restatements Gleason et al 2008;Wilson 2008), these relationships clearly are non-trivial.…”

Section: Resultsmentioning

confidence: 99%

Does a Lack of Choice Lead to Lower Quality?: Evidence from Auditor Competition and Client Restatements

2011

View full text Add to dashboard Cite

SUMMARY:We examine the relationship between auditor competition and the likelihood of financial restatements that occur as a result of failures in the application of generally accepted accounting principles (GAAP). Policy makers and audit market participants have expressed concern that the current level of auditor competition is low, resulting in a negative impact on audit quality. However, we find that restatements are more likely to occur in metropolitan statistical areas (MSAs) that have higher auditor competition. The association between audit market competition and restatements is statistically and economically significant. Our finding of a positive relationship between the likelihood of restatement and audit market competition is relevant to the ongoing debate regarding audit quality and the concentration of audit markets.

show abstract

Section: Resultsmentioning

confidence: 99%

Does a Lack of Choice Lead to Lower Quality?: Evidence from Auditor Competition and Client Restatements

2011

View full text Add to dashboard Cite

show abstract

“…This line of research has identified negative capital market effects on focal firms due to association with restating firms via industries (Gleason, Jenkins, and Johnson 2008) and common directorships (Chen and Goh 2010). Srinivasan (2005) finds that audit committee association with a restating firm leads to audit committee member turnover not only at the restating firm, but also on other audit committees.…”

Section: Chapter 2: Extant Researchmentioning

confidence: 99%

Audit Committee Member Contextual Experiences and Financial Reporting Outcomes

Shepardson

2013

SSRN Journal

View full text Add to dashboard Cite

“…For example, Palmrose, Richardson, and Scholz (2004) report a -9.2% of market return loss over a two-day (0,1) of restatement announcement period, and Hribar and Jenkins (2004) find that the cost of capital rises after restatements. Moreover, Gleason et al (2008) explore the industry contagion effect of earning restatements from the investor's perspective, and find that when a firm restates, the peer firms in the same industry also experience stock price declines.…”

Section: Prior Research and Backgroundmentioning

confidence: 99%

Board Interlocks and Earnings Management Contagion

2010

View full text Add to dashboard Cite

We examine whether earnings management spreads from firm to firm via board connections. We find that contagion of accounting quality occurs via directors in interlocking boards with other firms. A firm with director links to firms that restated earnings tends to have poorer accounting quality and higher likelihood of restating its own financial reports. A firm with director links to firms that did not restate earnings tends to have higher accounting quality. This evidence supports the idea that economic behavior such as accruals management spreads through social networks.

show abstract

The Contagion Effects of Accounting Restatements

Cited by 154 publications

References 57 publications

Does a Lack of Choice Lead to Lower Quality?: Evidence from Auditor Competition and Client Restatements

Does a Lack of Choice Lead to Lower Quality?: Evidence from Auditor Competition and Client Restatements

Audit Committee Member Contextual Experiences and Financial Reporting Outcomes

Board Interlocks and Earnings Management Contagion

Contact Info

Product

Resources

About