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JOURNAL OF ACCOUNTING AND FINANCE
Analyst Forecasts around Restatement Announcements
Author(s): Michael D. Yu, Yun Cheng, Bruce Bird
Citation: Michael D. Yu, Yun Cheng, Bruce Bird, (2018) "Analyst Forecasts around Restatement Announcements", Journal of Accounting and Finance, Vol. 18, ss. 1, pp117-132
Article Type: Research paper
Publisher: North American Business Press
Abstract:
This study analyzes properties of the information contained in analysts’ earnings forecasts around restatement announcements. We hypothesize that analysts will place greater emphasis on their own private information when there is greater ambiguity surrounding a firm’s financial statements. After the firm announces a restatement, the ambiguity will decrease, and accordingly analysts’ emphasis on private information will also decrease. Our empirical results are consistent with this hypothesis. We find that analysts’ private information is higher in years before restatement announcements and insignificant after restatement announcements. We also find that the public information is higher in years before restatement announcements, although it is weaker than the private information.
