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dc.contributor.advisorHodge, Frank
dc.contributor.authorSinha, Roshan K.
dc.date.accessioned2019-08-14T22:30:23Z
dc.date.submitted2019
dc.identifier.otherSinha_washington_0250E_19873.pdf
dc.identifier.urihttp://hdl.handle.net/1773/44084
dc.descriptionThesis (Ph.D.)--University of Washington, 2019
dc.description.abstractRevision restatements are a growing phenomenon in which firms correct errors related to prior financials. Revision restatements are permitted only when firms consider the errors individually immaterial for the periods in which they occurred, but material when combined across periods. Unlike reissuance restatements, firms do not issue a stand-alone filing but instead simply correct the historical values in the next set of issued financial statements. Archival research finds that revision restatements predict negative firm outcomes, such as future material errors and material weaknesses. I draw from psychology and accounting research to predict that investors fail to fully process these restatements. Using an experiment, I find that when a firm corrects prior earnings downward, prospective investors update their beliefs more than current investors and consider the errors to be more material. When the firm makes the revision restatement easier to process by providing a quantitative reconciliation, there is a greater increase in how much prospective investors update their beliefs compared to current investors, who do not update at all. This study contributes to the emerging literature on revision restatements, the existing accounting literature on the continued influence effect, motivated reasoning and quantitative reconciliations, and the regulatory debate on materiality.
dc.format.mimetypeapplication/pdf
dc.language.isoen_US
dc.rightsnone
dc.subjectcontinued influence effect
dc.subjectmateriality
dc.subjectmotivated reasoning
dc.subjectprocessing costs
dc.subjectquantitative reconciliation
dc.subjectrevision restatements
dc.subjectAccounting
dc.subject.otherBusiness administration
dc.titleInvestors’ Reactions to Revision Restatements: An Examination of Investment Position and Quantitative Reconciliation
dc.typeThesis
dc.embargo.termsRestrict to UW for 5 years -- then make Open Access
dc.embargo.lift2024-07-18T22:30:23Z


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