This study investigates a large sample of financial statement restatements over the period 1986-2001, and compares restatements caused by changes in accounting principles to those caused by errors. Typically, investors perceive restatements as negative signals due to three potential reasons: (i)...

In contrast to past auditor opinions, which were largely unqualified and uniformly written, a new disclosure requirement expands auditors' opinions to include a description of Critical Audit Matters (“CAMs”) and the audit steps necessary to form an opinion about them. The expanded disclosure...

Firm disclosure of order backlog (OB) is considered important to assess future sales and profits. The extant literature on OB has generally documented positive associations between increases in OB and market returns. These associations were based on annual disclosures of backlog in 10-K filings,...

This study explores whether the management discussion and analysis (MDamp;A) section of Forms 10-Q and 10-K has incremental information content beyond financial measures such as earnings surprises and accruals. It uses a classification scheme of words into positive and negative categories to...

There is growing evidence in the finance literature that investor sentiment affects stock prices. We examine whether stock price reactions to earnings surprises and accruals vary systematically with the level of investor sentiment. Using quarterly drift tests and monthly trading strategy...