Title: FINANCIAL RESTATEMENT: IMPACT ON MARKET REACTION
Author: DESY ISMAH ANGGRAINI
Affiliations : Masters Program in Accounting, Faculty of Economics and Business, Universitas Airlangga , Surabaya, Indonesia
Publisher: Universitas Airlangga
Abstract
The aim of this research is to prove the market reaction when a financial restatement occurs, the market reaction before and after a financial restatement and to prove that there are differences in reactions when a financial restatement is driven by different reasons. The research used companies that carried out financial restatements from 2012 to 2017 using the event study method and using an event window five days before and after the announcement of the financial restatement. The research uses the classification of causes of financial restatement from GAO (2002) and uses abnormal returns as a proxy for measuring market reactions. The research uses the market-adjusted model method to measure expected returns. The results of the research show that a small number of investors consider that information on the causes of a financial restatement is important information, but the majority of investors think that information on the causes of a financial restatement is not important information that can reduce or increase the value of the company so it cannot influence the market's decision to invest. The market does not react to financial restatement information so there is no influence on abnormal returns which are used as a proxy in measuring market reactions. This is proven by the absence of reaction before and after the financial restatement announcement.
Keywords: abnormal return, financial restatement, market reaction
Sources: http://repository.unair.ac.id/80357/
