Abstract
In this paper we study the multiple restatement announcements and its perceived resultant information asymmetry around the announcement day. We examine the pattern of information asymmetry for multiple restatement announcements in terms of bid-ask spread around the announcement day. Study of spread behavior around corporate events that have been performed in the past show a mixed picture. While Conrad and Niden (1992) find weak evidence of spread widening around corporate information event, Barclay and Smith (1988) find an increase in spread during stock repurchases announcements. Palmrose, Richardson and Scholz (2004) do not find any significant proportionate change in bid-ask spread surrounding the financial restatement announcement day. Results from our empirical analysis support the hypotheses that the spread widens not only around the first restatement announcement day but around every subsequent restatement announcement days as well.
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