Earnings Restatements and Differential Timeliness of Accounting Conservatism

@article{Ettredge2012EarningsRA,
  title={Earnings Restatements and Differential Timeliness of Accounting Conservatism},
  author={Michael L. Ettredge and Ying Huang and W. Zhang},
  journal={Journal of Accounting and Economics},
  year={2012},
  volume={53},
  pages={489-503}
}
We examine whether Basu's (1997) differential timeliness metric and the related C-Score metric are effective in detecting predictable differences in conservatism surrounding corrections of overstated earnings. Cross-sectional and time-series analyses, employing 2132 firms making restatements during 1999–2005, suggest Basu-based metrics capture variation in conservatism. Further, we find that increases in conservatism following restatements are contingent on improvements in corporate governance… Expand
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