The Empirical Research On Market Reaction Of Earnings Restatement In Listed Companies

Information quality is the lifeline of the capital market. Only by guaranteeing the authenticity, completeness and timeliness of information disclosure, can we form an effective capital market. The financial statements as a listed company disclosed the company’s financial position and operating results information carriers, it is an important way for investors to get company information. In recent years, however, the behavior of financial statements restatement appears frequency, which has attracted the attention of scholars both at home and abroad. Financial restatement, also called financial reports restatement, or restatement, it refers to the behavior that the listed companies find and correct errors from financial reports at the early stage, then describe the previously published financial statements again. Financial restatements show that there are omissions or errors in the annual report the listed companies have disclosed before, and the authenticity and reliability of the information disclosure get hurt. The focus of this article is the most important financial restatement, surplus restatement. In this dissertation, we focus on earnings restatement, one of the most important restatement types. Surplus account in the financial report has the key information of the listed companies’ operating performance. Earnings restatement is the most serious financial restatement behavior.This paper is consisted of the following five parts: The first part is the introduction of this paper, including the background, research significance, the research train of thought, framework and research methods, the innovation of the article, this paper also overall reviews the domestic and foreign references relevant to financial restatement. The second part is the theory analysis about the market reaction of earnings restatement. This part first introduces the definition of earnings restatement and some relevant concepts, then introduces the related theory about the market reaction of earnings restatement. The third part analyzes the current situation of earnings restatement and introduces the research hypothesis. I choose the a-sharelisted companies in our country which have released earnings restatement from 2009 to 2013 as samples, and give a panoramic description from scale, content and restated disclosure aspects. The fourth part is the empirical study design. Test the market reaction before and after the announcement by using event study method. The results show that the capital market harvests negative effect significantly within the short time window before and after the restatement announcement. Besides, I set up multiple regression equation to check the effect of each variable on the dependent variable CAR empirically. The empirical result shows that the accounting error is one of the means of earnings management. The listed companies tend to choose the time of information disclosure, and the aggregation restatements which released at the same time with the annual financial report are more than the separation restatements. The fifth part is the conclusion and policy suggestions. This part comes out the research conclusions, points out the deficiency of this article. Suggestions are put forward according to the current problems existing in the securities market.