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- Title
An Examination of Management's Regulatory Filing Choices Surrounding Restatements.
- Authors
Plumlee, Marlene A.; Lombardi Yohn, Teri
- Abstract
A restatement suggests the existence of managerial errors and internal control weaknesses within the company. Disclosures of restatements highlight ineffective management and control systems such that management might act strategically in disclosing restatement and choose less transparent options. There are, however, external forces that likely encourage management to provide more transparent restatement disclosures, despite the fact that managerial ineffectiveness will be publicized. We examine the association between company and restatement characteristics and management's restatement filing choices to provide insight into external economic forces driving the choice. We document that more transparent filing is positively associated with the materiality of the restatement, an SEC investigation, the reporting of material internal control weaknesses, and leverage, and negatively associated with a CEO change. We also find that restatements filed via 8-Ks and via 10-K/As, after the SEC rule clarification in August 2004, are associated with significantly more negative market reactions than other restatements.
- Subjects
INTERNAL auditing; MANAGEMENT controls; MANAGERIAL accounting; EXECUTIVE succession; UNITED States. Securities &; Exchange Commission
- Publication
Journal of Management Accounting Research, 2015, Vol 27, Issue 2, p121
- ISSN
1049-2127
- Publication type
Article
- DOI
10.2308/jmar-50744