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The purpose of this paper is to analyze the restatement information disclosed in the Form 8K and the Press Release. It examines the relationship between manipulating the quantity, quality, manner and timing of restatement information and the probability of committing fraud.

The authors used 18 informational indicators developed by BenYoussef and Breton (2016), and applied the prediction methodology based on F-scores, developed by Dechow et al. (2011).

Results indicate that the information content of restatement announcements provides significant insights into the likelihood of fraud occurrence. A firm that manipulated previous earnings will continue to do so, and will try to mislead investors by releasing inaccurate and incomplete information in the Form 8K and the Press Release. The model helps identify this manipulation and hence can be used as a tool for fraud detection.

This paper applies the constructs drawn from Information Manipulation Theory to restatement contexts to detect fraud.

The paper is of use to regulators, investors and financial crime experts, as it provides insights to better fraud detection.

The paper is based on proprietary data that were hand collected, and is being used first time to predict fraud.

Prior research has examined the impact of corporate governance mechanisms, including external auditing, on accounting restatements likelihood. However, little is known about auditor’s monitoring role in restatement disclosure practices. The purpose of this study is to address this gap by investigating the impact of auditor’s oversight on the timeliness of accounting restatement disclosures as measured by the length of the restatement dark period.

The study examines panel data from a sample of restating publicly traded US firms. Negative binomial regression is used to analyze the data because the dependent variable is a count variable and is over-dispersed.

The main study’s results indicate that longer auditor tenure and non-audit services provision improve restatement disclosure timeliness. Conversely, companies whose auditors exerted abnormally high levels of audit effort have longer restatement dark periods.

This study is the first archival research that focuses on auditor’s monitoring role and its impact on the timeliness of restatement disclosures. By doing so, this study contributes to the auditing academic research, professional practice and regulation by providing empirical evidence on an exasperating issue for all participants in the financial markets. In addition, it provides a better understanding of auditor’s monitoring role in the accounting restatement process and offers insights to policymakers, practitioners and investors interested in corporate financial transparency and corporate governance.

The purpose of this paper is to examine how chief executive officers’ (CEOs) narcissism impacts firm performance and how this, in turn, affects a CEO’s positive rhetorical tone.

The narcissism score is measured by using an analytical composite score for each CEO based on eight factors. The paper uses textual analysis on a sample of 848 CEO letters of US firms over the period 2010–2019. WarpPLS software, version 7.0 was used to conduct structural equation modeling through the partial least squares because a non-linear algorithm exists between CEO narcissism, firm performance and positive tone, and the values of path coefficients moved from non-significant to significant.

The results suggest that performance partially mediates the relationship between CEO narcissism and positive tone. This indicates that not all the positivity expressed by narcissistic CEOs is opportunism; some of it is indeed driven by better performance. The reported findings indicate that firm performance explains one-quarter of a CEO’s positive words, whereas some three-quarters of the positivity is driven by a narcissistic CEO (i.e. opportunism). A comparison of letters signed by highly narcissistic and less narcissistic leaders reveals that among those letters signed by highly narcissistic leaders, firm performance plays a significant mediating role between narcissistic tendencies and positive tone. However, among those with less narcissistic score, there is no evidence that performance mediates the tone and narcissism. Interestingly, both highly narcissistic and less narcissistic CEOs use positive words and optimistic expressions even when their firms perform poorly or negatively.

The results help shareholders be aware that CEOs may opportunistically use their personal characteristics and language to manipulate them. Data limitations about women CEOs were one of the reasons behind the small proportion of women CEOs in this study, making it low in generalizability.

A comprehensive review showed that none of previous studies examined the more ambiguous relationship between a CEO’s narcissist tendency, the firm’s performance, and CEO rhetorical tone. As one set of studies focused on Narcissism → Performance, and the other one on Performance → Tone, this current study completes the picture with Narcissism → Performance → Tone.