Document Type
Article
Article Version
Pre-print
Publication Date
2011
Abstract
We examine security issuance in restated periods by firms that misreport financial statements and find that only a small per cent of such firms issues securities in the restated period. Investors are misled by mistakes made by firms issuing equity more so than other restating firms at the initial announcement of misreported earnings, but are not misled by mistakes made by debt-issuing firms. Equity-issuing firms that manage earnings to beat analyst expectations experience abnormally high returns in the restated period prior to security issuance. Firms that restated more reports and have higher pre-mistake returns are more likely to issue equity. High leverage, firm size and number of restated periods are positively associated with the likelihood of debt issuance by restating firms.
Publication Title
Accounting and Finance
Repository Citation
Salavei Bardos, Katsiaryna and Zaiats, Nataliya, "Equity and debt issuance by firms violating GAAP" (2011). Business Faculty Publications. 27.
https://digitalcommons.fairfield.edu/business-facultypubs/27
Published Citation
Bardos, Katsiaryna Salevei, and Nataliya Zaiats. 2011. Equity and debt issuance by firms violating GAAP.
DOI
10.1111/j.1467-629X.2011.00443.x
Comments
Copyright 2011 Wiley-Blackwell
This is a pre-print of an article accepted for publication in Accounting and Finance. The definitive version is available at www3.interscience.wiley.com.