Are Investors Confused by Restatements after Sarbanes-Oxley?

• 成果类型: Article
• 署名作者: Burks, Jeffrey J.
• 署名单位: University of Notre Dame
• 刊物名称: ACCOUNTING REVIEW
• ISSN/ISSBN: 0001-4826
• DOI: 10.2308/accr.00000017
• 发表日期: 2011
• 页码: 507-539
• 关键词: TRADING VOLUME; earnings; MARKET; INFORMATION; returns; disclosure; announcement; price

摘要

Regulators have expressed concern that investors are confused by the large number and questionable materiality of accounting restatements since passage of the Sarbanes-Oxley Act (SOX). This study looks for evidence of investor confusion by examining stock returns and trading volume. I find that the initial price reaction to restatement announcements becomes significantly less negative after SOX, even after controlling for the less egregious nature of post-SOX restatements. To assess whether the less negative reaction represents under-reaction, I test whether stock prices drift negatively over the months and years after the initial reaction. I find no evidence of statistically negative drifts unique to the post-SOX period. In fact, I find that post-SOX drifts are statistically less negative than pre-SOX drifts, suggesting that price efficiency actually improves after SOX. Finally, I find no evidence that post-SOX restatements have higher trading volume after controlling for contemporaneous returns, suggesting no increase in disagreement among investors about the restatements. Thus, the findings provide little evidence that investors are confused by post-SOX restatements.