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Evidence on the Incremental Information Contained in the Components of Restructuring Charges

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  • Thomas J. Lopez

Abstract

Among the new disclosures required by EITF 94–3 is the requirement that firms disclose the nature and amounts of the material components of a restructuring charge. The objective of this paper is to assess whether these components provide information to financial statement users beyond that contained in the aggregate charge. The evidence is consistent with the decomposition of the charge providing incremental information that would be lost if only the aggregate number is reported. The results also appear to suggest that analysts interpret restructurings as bad news and that inventory writedowns and employee terminations are interpreted as the most negative restructuring components.

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  • Thomas J. Lopez, 2002. "Evidence on the Incremental Information Contained in the Components of Restructuring Charges," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 29(5‐6), pages 613-659.
    • Handle: RePEc:bla:jbfnac:v:29:y:2002:i:5-6:p:613-659
    DOI: 10.1111/1468-5957.00445
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    Cited by:

    1. Ka Wai Choi & Xiaomeng Chen & Sue Wright & Hai Wu, 2014. "Analysts' Forecasts Following Forced CEO Changes," Abacus, Accounting Foundation, University of Sydney, vol. 50(2), pages 146-173, June.
    2. Lori Holder-Webb & Thomas Lopez & Philip Regier, 2005. "The Performance Consequences of Operational Restructurings," Review of Quantitative Finance and Accounting, Springer, vol. 25(4), pages 319-339, December.
    3. William M. Cready & Thomas J. Lopez & Craig A. Sisneros & Shane R. Stinson, 2023. "Empirical implications of incorrect special item tax rate assumptions," Review of Accounting Studies, Springer, vol. 28(2), pages 958-1002, June.
    4. Beixin Lin & Rong Yang, 2012. "Does Regulation Fair Disclosure affect analysts’ forecast performance? The case of restructuring firms," Review of Quantitative Finance and Accounting, Springer, vol. 38(4), pages 495-517, May.

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