We examine the investor reaction to misstatement news for Australian listed firms from 2006 to 2013. We find 4.1 percent of firm-years have a misstatement and 79 percent of misstatements are disclosed initially only in the periodic filings (stealth misstatements). We find no investor reaction for the average misstatement, reactions of between −2.3 percent and −2.8 percent (−1.5 and −1.7 percent) for misstatements that reduce prior-period earnings or equity (affect revenue) and reactions of between −1.3 and −2.7 percent for non-stealth misstatements. Investor reactions are more negative for non-stealth misstatements that reduce prior-period earnings or equity than for stealth misstatements.<p></p>
Publication Date
2020-01-01Journal
Accounting and FinanceVolume
60Issue
3Pagination
46p. (p. 2467-2512)Publisher
WileyISSN
0810-5391Rights Statement
© 2018 Accounting and Finance Association of Australia and New Zealand
This is the peer reviewed version of the following article: Goodwin J; Atilgan Y; Simsir SA & Ahmed K (2020). Investor reaction to accounting misstatements under IFRS: Australian evidence. Accounting and Finance, 60(3), 2467-2512, which has been published in final form at http://doi.org/10.1111/acfi.12395. This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Use of Self-Archived Versions. This article may not be enhanced, enriched or otherwise transformed into a derivative work, without express permission from Wiley or by statutory rights under applicable legislation. Copyright notices must not be removed, obscured or modified. The article must be linked to Wiley’s version of record on Wiley Online Library and any embedding, framing or otherwise making available the article or pages thereof by third parties from platforms, services and websites other than Wiley Online Library must be prohibited.
