Accounting complexity, misreporting, and the consequences of misreporting

Accounting complexity, misreporting, and the consequences of misreporting I examine whether accounting complexity in the area of revenue recognition increases the probability of restating reported revenue. I measure revenue recognition complexity using the number of words and recognition methods from the revenue recognition disclosure in the 10-K and a factor score based on the number of words and methods. Tests reveal that revenue recognition complexity increases the probability of revenue restatements, and these restatements are the result of both intentional and unintentional misreporting. Furthermore, complexity moderates the consequences of restatement—lower incidence of AAERs, less negative restatement announcement returns, and lower subsequent CEO turnover—suggesting that stakeholders of the firm consider accounting complexity when responding to misreporting. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Review of Accounting Studies Springer Journals

Accounting complexity, misreporting, and the consequences of misreporting

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Publisher
Springer US
Copyright
Copyright © 2011 by Springer Science+Business Media, LLC
Subject
Business and Management; Accounting/Auditing; Corporate Finance; Public Finance
ISSN
1380-6653
eISSN
1573-7136
D.O.I.
10.1007/s11142-011-9164-5
Publisher site
See Article on Publisher Site

References

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