Evidence on the Incremental Information Contained in the Components of Restructuring Charges

Evidence on the Incremental Information Contained in the Components of Restructuring Charges Among the new disclosures required by EITF 94–3 is the requirement that firms disclose the nature and amounts of the material components of a restructuring charge. The objective of this paper is to assess whether these components provide information to financial statement users beyond that contained in the aggregate charge. The evidence is consistent with the decomposition of the charge providing incremental information that would be lost if only the aggregate number is reported. The results also appear to suggest that analysts interpret restructurings as bad news and that inventory writedowns and employee terminations are interpreted as the most negative restructuring components. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Business Finance & Accounting Wiley

Evidence on the Incremental Information Contained in the Components of Restructuring Charges

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Publisher
Wiley Subscription Services, Inc., A Wiley Company
Copyright
Copyright © 2002 Wiley Subscription Services, Inc., A Wiley Company
ISSN
0306-686X
eISSN
1468-5957
D.O.I.
10.1111/1468-5957.00445
Publisher site
See Article on Publisher Site

Abstract

Among the new disclosures required by EITF 94–3 is the requirement that firms disclose the nature and amounts of the material components of a restructuring charge. The objective of this paper is to assess whether these components provide information to financial statement users beyond that contained in the aggregate charge. The evidence is consistent with the decomposition of the charge providing incremental information that would be lost if only the aggregate number is reported. The results also appear to suggest that analysts interpret restructurings as bad news and that inventory writedowns and employee terminations are interpreted as the most negative restructuring components.

Journal

Journal of Business Finance & AccountingWiley

Published: Jan 1, 2002

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