The market effects of the German two-tier enforcement of financial reporting

Arbeitspapier

This study contributes to the literature by analyzing the potential market penalties due to financial reporting violations detected by the German enforcement regime. Event study results provide evidence that official error announcements lead to significant negative (cumulative) abnormal returns. Investigating the variation between the cumulative abnormal returns, the cross-sectional analysis indicates that companies are able to dilute the (negative) capital market reaction by releasing other (positive) information simultaneously. The negative stock market reaction is less pronounced for profit-decreasing errors. The cumulative abnormal returns are more negative for companies that have been listed for a longer period of time.

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• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Tübinger Diskussionsbeiträge ; No. 334

Classification and Topics

• Classification: Wirtschaft ; Information and Market Efficiency; Event Studies; Insider Trading ; Accounting
• Subject: German two-tier enforcement regime ; quality of financial accounting ; erroneous financial reports ; Federal Financial Supervisory Authority (BaFin) ; Financial Reporting Review Panel (FREP)

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Hecker, Renate ; Wild, Andreas
• Event: Veröffentlichung
• (who): Eberhard Karls Universität Tübingen, Wirtschaftswissenschaftliche Fakultät
• (where): Tübingen
• (when): 2012

Further information

• Handle: http://hdl.handle.net/10419/73653
• URN: urn:nbn:de:bsz:21-opus-67691