The Economic Consequences of Financial Restatements: Evidence from the Market for Corporate Control

2014 ◽  
Vol 90 (1) ◽  
pp. 1-29 ◽  
Author(s):  
Amir Amel-Zadeh ◽  
Yuan Zhang
Keyword(s):  
Corporate Control ◽  
Economic Consequences ◽  
Economic Resources ◽  
Data Availability ◽  
Matched Sample ◽  
Market For Corporate Control ◽  
Financial Restatements ◽  
Main Driver ◽  
Takeover Bids ◽  
Jel Classifications

ABSTRACT This paper investigates whether and how financial restatements affect the market for corporate control. We show that firms that recently filed financial restatements are significantly less likely to become takeover targets than a propensity score matched sample of non-restating firms. For those restating firms that do receive takeover bids, the bids are more likely to be withdrawn or take longer to complete than those made to non-restating firms. Finally, there is some evidence that deal value multiples are significantly lower for restating targets than for non-restating targets. Our analyses suggest that the information risk associated with restating firms is the main driver of these results. Overall, this study finds that financial restatements have profound consequences for the allocation of economic resources in the market for corporate control. JEL Classifications: D82; G14; G34; M41. Data Availability: Data are available from sources identified in the paper.

Changes in Audit Quality under Auditing Standard No. 5

2016 ◽  
Vol 16 (1) ◽  
pp. 57-83 ◽  
Author(s):  
Michelle Draeger ◽  
Don Herrmann ◽  
Bradley P. Lawson
Keyword(s):  
Audit Quality ◽  
Financial Statements ◽  
Data Availability ◽  
Financial Restatements ◽  
The Impact ◽  
Reallocation Of Resources ◽  
Jel Classifications

ABSTRACT We examine the impact of Auditing Standard No. 5 (AS5) on audit quality. Prior research suggests a reallocation of resources toward higher-risk clients with no overall change in audit quality associated with the adoption of AS5. However, using financial restatements as our proxy for audit quality, we find the likelihood that financial statements are subsequently restated decreases in the AS5 period. These results are robust to several additional analyses. In addition to testing the occurrence of a restatement event, our results indicate that the duration of the restated period decreases during the AS5 period. Consistent with the objectives of AS5, we also find that the improvements in audit quality associated with AS5 are greater for complex firms than non-complex firms. Overall, using financial restatements as our proxy for audit quality, our results suggest that audit quality improves following the issuance of AS5. JEL Classifications: M41 Data Availability: The data used in this paper are publicly available from the sources indicated in the text.

scholarly journals An Applied Econometricians' View of Empirical Corporate Governance Studies

2002 ◽  
Vol 3 (3) ◽  
pp. 295-326 ◽  
Author(s):  
Axel Börsch-Supan ◽  
Jens Köke
Keyword(s):  
Corporate Governance ◽  
Capital Structure ◽  
Ownership Structure ◽  
Empirical Studies ◽  
Corporate Control ◽  
Data Availability ◽  
Empirical Literature ◽  
Board Structure ◽  
Critical Survey ◽  
Market For Corporate Control

Abstract The economic analysis of corporate governance is in vogue. In addition to a host of theoretical papers, an increasing number of empirical studies analyze how ownership structure, capital structure, board structure, and the market for corporate control influence firm performance. This is not an easy task, and indeed, for reasons explained in this survey, empirical studies on corporate governance have more than the usual share of econometric problems. This paper is a critical survey of the recent empirical literature on corporate governance - to show which methodological lessons can be learned for future empirical research in the field of corporate governance, paying particular attention to German institutions and data availability.

The Political Dynamics of Marketizing “Corporate Control”

2018 ◽  
Author(s):  
Helen Callaghan
Keyword(s):  
Market Failure ◽  
Corporate Control ◽  
Background Information ◽  
The Political ◽  
Political Dynamics ◽  
Market For Corporate Control ◽  
Case Selection ◽  
Political Struggles ◽  
Long Time ◽  
Takeover Bids

Chapter 2 provides background information pertaining to the regulation of takeover bids, to clarify how political struggles surrounding shareholder rights elucidate the political dynamics of marketization. Four considerations motivated the case selection. First, the so-called market for corporate control cannot arise spontaneously and is prone to market failure, because corporate control is a fictitious good in need of commodification by means of market-enabling rules. Second, the rules governing this market are politically contentious because they have significant distributional implications. Third, struggles surrounding these rules pit different kinds of equally well-endowed profit-oriented opportunists against one another. Fourth, the process started a long time ago and played out differently in different countries, partly due to variation in the political salience of hostile bids.

Raiders Activity on the Market for Corporate Control as a Product of Coercive Entrepreneurship Evolution

2007 ◽  
pp. 80-92
Author(s):  
A. Kireev
Keyword(s):  
Corporate Control ◽  
Role Of Government ◽  
Market For Corporate Control ◽  
Basic Characteristics

The paper studies the problem of raiders activity on the market for corporate control. This activity is considered as a product of coercive entrepreneurship evolution. Their similarities and sharp distinctions are shown. The article presents the classification of raiders activity, discribes its basic characteristics and tendencies, defines the role of government in the process of its transformation.

The Value of SOX 404 in the Market for Corporate Control

2009 ◽  
Author(s):  
Masako N. Darrough ◽  
Rong Huang ◽  
Emanuel Zur
Keyword(s):  
Corporate Control ◽  
Market For Corporate Control
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