RT Article
T1 How Do Investors Respond to Restatements? Repairing Trust Through Managerial Reputation and the Announcement of Corrective Actions
JF Journal of business ethics
VO 158
IS 2
SP 297
OP 312
A1 Cianci, Anna M.
A1 Clor-Proell, Shana M.
A1 Kaplan, Steven E.
A2 Clor-Proell, Shana M.
A2 Kaplan, Steven E.
LA English
YR 2019
UL https://ixtheo.de/Record/1785597337
AB Following SOX, financial restatements increased dramatically. Prior research suggests that how investors respond to restatements, particularly those involving fraud, may mitigate or exacerbate damage suffered. We extend both accounting and management research by examining the joint effects of pre-restatement managerial reputation and the announcement of managerial corrective actions in response to a restatement on nonprofessional investors’ judgments. We find that pre-restatement managerial reputation and the announcement of managerial corrective actions jointly influence investors’ managerial fraud prevention assessments, which mediate their trust in management. These trust perceptions in turn affect investors’ investment and CEO retention judgments. Our results have implications for firms that are concerned with lessening the negative consequences associated with issuing a restatement.
K1 Trust
K1 Restatement
K1 Reputation
K1 Nonprofessional investors
K1 Fraud prevention
K1 Corrective action
DO 10.1007/s10551-018-3844-z