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Investor reaction to accounting misstatements under IFRS: Australian evidence

Author

Listed:
  • John Goodwin
  • Yigit Atilgan
  • Serif Aziz Simsir
  • Kamran Ahmed

Abstract

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.

Suggested Citation

  • John Goodwin & Yigit Atilgan & Serif Aziz Simsir & Kamran Ahmed, 2020. "Investor reaction to accounting misstatements under IFRS: Australian evidence," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 60(3), pages 2467-2512, September.
    • Handle: RePEc:bla:acctfi:v:60:y:2020:i:3:p:2467-2512
    DOI: 10.1111/acfi.12395
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    2. Guilherme Belloque & Martina K Linnenluecke & Mauricio Marrone & Abhay K Singh & Rui Xue, 2021. "55 years of Abacus: Evolution of Research Streams and Future Research Directions," Abacus, Accounting Foundation, University of Sydney, vol. 57(3), pages 593-618, September.

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