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The Association Between Changes in Accounting Estimates and Accounting Restatements

2018
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Release : 2018
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Book Synopsis The Association Between Changes in Accounting Estimates and Accounting Restatements by : Philip Beaulieu

Download or read book The Association Between Changes in Accounting Estimates and Accounting Restatements written by Philip Beaulieu. This book was released on 2018. Available in PDF, EPUB and Kindle. Book excerpt: This paper investigates the relationship between changes in accounting estimates and subsequent restatements. Theory suggests that depending on the underlying reason for an estimate change, this relationship can be either negative (for changes in estimates made in response to new developments or management having obtaining new information) or positive (for changes in accounting estimates made with an objective of managing earnings or changes that are not reliably estimated and are poorly audited). We hypothesize and find a positive relationship between changes in estimates and restatements. There is also support for the prediction that the presence of a change in accounting estimate(s) is associated with an increased likelihood of subsequent restatement to correct intentional misstatement. The findings of the study are of interest to accounting academics, regulators, and audit practitioners.

Accounting restatement: a European perspective - e-Book

2021-03-02 Business & Economics
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Release : 2021-03-02
Genre : Business & Economics
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Book Rating : 603/5 ( reviews)

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Book Synopsis Accounting restatement: a European perspective - e-Book by : MAFROLLA ELISABETTA

Download or read book Accounting restatement: a European perspective - e-Book written by MAFROLLA ELISABETTA. This book was released on 2021-03-02. Available in PDF, EPUB and Kindle. Book excerpt: This book is motivated by the long-lasting, although still recent, discussion on how to ensure that accounting numbers, while supported by auditors’ favourable opinions, are definitely reliable and eliminate any suspicion that accounting reports could be affected by opportunism, which is documented by the discovery of frequent accounting mistakes. The book analyses and discusses restatements from both the theoretical and the practical perspective, considering the complex environment in which they may occur and focusing particularly on accounting restatements that have affected European corporations for over a decade since the mandatory adoption of the International Financial Reporting Standards.

Accounting Restatements and Key Audit Matters disclosure

2022-07-15 Business & Economics
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Release : 2022-07-15
Genre : Business & Economics
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Book Rating : 363/5 ( reviews)

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Book Synopsis Accounting Restatements and Key Audit Matters disclosure by : MATOZZA FELICE

Download or read book Accounting Restatements and Key Audit Matters disclosure written by MATOZZA FELICE. This book was released on 2022-07-15. Available in PDF, EPUB and Kindle. Book excerpt: This monograph is one of the few books to investigate the understudied but fascinating topic of accounting restatement in the European context. In the first chapter, substantial changes over time in treatments for correction of errors under the International Financial Reporting Standards and Italian generally accepted accounting principles are examined. Following that, a brief overview of the literature, mainly concerning the United States environment, and characteristics of and trends in accounting issues drawn from restatements announced by a sample of firms listed in European countries from 2016 to 2020 are presented. After a review of multi-country empirical research, chapter 3 presents an assessment of the frequency and severity of restatements at the country, industry and year levels. Finally, chapter 4 considers the forewarning effect of topics communicated in the key audit matters in relation to subsequently revealed account-specific misstatements by proposing a new matching procedure. Throughout the work, the author provides frequent comparisons with findings obtained by United States scholars.

Accounting Restatements and Information Risk

2010
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Release : 2010
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Book Synopsis Accounting Restatements and Information Risk by : Todd D. Kravet

Download or read book Accounting Restatements and Information Risk written by Todd D. Kravet. This book was released on 2010. Available in PDF, EPUB and Kindle. Book excerpt: We examine the association between accounting restatements and the pricing of information risk. Using the Fama and French three-factor model augmented with an information risk factor we find a significant increase in the factor loadings on the information risk factor for restatement firms after a restatement announcement. We find that the increase is related to the discretionary component of information risk and associated with the short-window price reaction to restatements. We study several potential determinants of the change in information risk pricing and find evidence consistent with the restatement reason, restatement initiator and number of times a firm restates affecting the change in the pricing of information risk. We also find an increase, of smaller magnitude, in the pricing of information risk for non-restatement firms in the same industries as the restatement firms consistent with an information transfer effect.

Changes in Accounting Estimates

2019
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Release : 2019
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Book Synopsis Changes in Accounting Estimates by : Aloke Ghosh

Download or read book Changes in Accounting Estimates written by Aloke Ghosh. This book was released on 2019. Available in PDF, EPUB and Kindle. Book excerpt: We investigate whether companies strategically change accounting estimates to manipulate earnings, as some claim (“opportunism” hypothesis), or whether these modifications represent changes in the underlying fundamentals of financially troubled or risky companies updating their priors about future expectations because of operational changes (“risk” hypothesis). Using audit fees, propensity to meet or beat earnings forecasts, and restatements as surrogates for managerial opportunism/bias, we find evidence consistent with the risk hypothesis and inconsistent with opportunism hypothesis. Further, consistent with the risk hypothesis, over the years prior to the estimate changes, companies are more prone to idiosyncratic risks such as going concern problems, misstatements, discontinued operations, corporate restructuring, charge-offs, and internal control problems. The lack of evidence supporting the opportunism hypothesis is not surprising because, under US GAAP, companies are required to disclose the “dollar effect” of an accounting estimate change on net income in their financial statements.

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