Empirical evidence on repeat restatements

Rebecca Files, Nathan Y. Sharp, Anne M. Thompson

Research output: Contribution to journalArticlepeer-review


This study examines the characteristics and market consequences of repeat restatements. We find that 38 percent of the restating companies in our sample restate at least twice between 2002 and 2008, and 31 percent of repeat restatement firms restate three or more times during the same period. Our tests identify several auditor and restatement characteristics that distinguish single from repeat restatements at the time of the first restatement. Repeat restatements are more likely among clients of non-Big N auditors and those with lower ex ante accounting quality. However, firms that switch auditors between the end of their misstatement period and the restatement announcement are less likely to experience repeat restatements. Although subsequent restatements tend to be less severe than the first in a series of restatements, firms suffer similar declines in stock prices with up to three restatement announcements. In addition, firms often restate the same fiscal periods multiple times, and these "overlapping" restatements are more frequent when managers are distracted by other difficulties, such as discontinued operations or internal control weaknesses. Our findings should be valuable to investors, regulators, and other parties interested in repeat restatements. We provide research design recommendations for researchers to incorporate in future research.

Original languageEnglish (US)
Pages (from-to)93-123
Number of pages31
JournalAccounting Horizons
Issue number1
StatePublished - Mar 2014


  • Accounting restatements
  • Audit quality
  • Financial misreporting
  • Repeat restatements

ASJC Scopus subject areas

  • Accounting


Dive into the research topics of 'Empirical evidence on repeat restatements'. Together they form a unique fingerprint.

Cite this