Financial Statement Restatements Impacts on Accrual Quality

Abstract

ABSTRACT: in This paper, examine accrual quality of restating firms during the period 2001 – 2010.The sample include 70 restatement event for of listed companies in TSE and we compare accrual quality from before and after the restatement year. This firms have only once restatement in two years pre and post restatement year. Our measure for accrual quality is based on the Dechow and Dichev (2002) model. We find that the accrual quality increases significantly from the period of misstatement to the period following the restatement year. We also examine factors of associated with changes in accrual quality that is determinant of earnings quality including corporation governance ,Firm characteristics and audit quality. The results show that changes in size, change in sales, change in cash flows from operations, Leverage ratio, the ratio of market value to book value, the percentage ownership of institutional investors and CEO tenure are significant relationship with accrual quality.

Keywords

• Earning Quality
• Accrual
• quality
• Financialm Statements Restatement
• Corporation Governance