Keywords

financial restatements, corporate governance, market trust

Abstract

High profile financial restatements from companies like Enron, Worldcom, Healthsouth, and Tyco as well as less celebrated restatements from such companies as Red Hat, Nortel, and Bristol-Myers Squibb have shaken public trust in the U.S. capital market. The restating companies have watched their credit ratings drop, market values erode, and occasionally even faced bankruptcy (Palmrose et al. 2004; Hirschey et al. 2005). The preponderance of restatements, in part, led to the enactment of the Sarbanes-Oxley Act which reemphasized the need for, and the importance of, strong corporate governance.

Original Publication Citation

"Earnings misstatements, restatements and corporate governance." William G. Heninger, Yongtae Kim, Sandeep Naber, Journal of Forensic and Investigative Accounting 1:2 (July - December 2009).