Variable definitions
| Corporate governance change | |
| CEO/chairman dismissal | 1 if the CEO/chairman was dismissed within 24 months from CONSOB disclosure; 0 otherwise |
| Variable of interests – H1 FR type | |
| CN | 1 if the restatement is a CN; 0 if the restatement is a RFS and 0 if there is not a restatement |
| Variable of interests – H2 FR severity | |
| Severity of balance sheet (BS) FR | Absolute value of (total asset with errors − total asset restated)/(total asset restated) Data from the restated financial statement in the press release 0 if the restatement is a RFS 0 if the restatement is a CN with press release not available 0 if there is no restatement |
| Severity of income statement (IS) FR | Absolute value of (net income with errors − net income restated)/(net income restated) Data from the restated financial statement in the press release 0 if the restatement is a RFS 0 if the restatement is a CN with press release not available 0 if there is not a restatement |
| Great severity of FR | 1 if at least one of severity BS or severity IS is above the median (2% for change in total assets and 17% for change in net income) and 0 otherwise 0 if the restatement is a RFS 0 if the restatement is a CN with press release not available 0 if there is not a restatement |
| FR, which increases income | 1 if there is an increase in the net income in the restated financial statement; 0 otherwise Data from the restated financial statement in the press release 0 if the restatement is a CN with a decrease, non-variation of the net income in the press release 0 if the restatement is a RFS 0 if the restatement is a CN with press release not available 0 if there is not a restatement |
| FR, which decreases income | 1 if there is a decrease in the net income in the restated financial statement; 0 otherwise Data from the restated financial statement in the press release 0 if the restatement is a CN with an increase, non-variation of the net income in the press release 0 if the restatement is a RFS 0 if the restatement is a CN with press release not available 0 if there is not a restatement |
| FR, which does not change income | 1 if there is not a variation in the net income in the restated financial statement; 0 otherwise Data from the restated financial statement in the press release 0 if the restatement is a CN with a decrease, increase of the net income in the press release 0 if the restatement is a RFS 0 if the restatement is a CN with press release not available 0 if there is not a restatement |
| Variable of interests – H3 IFRS difficult-to-estimate | |
| Difficult-to-estimate IFRS | 1 if there is the indication of at least one difficult IAS not respected in the CONSOB resolution (difficult: IAS 37, IAS 38, IAS 39 and IFRS 7) 0 if there is not the indication of at least one difficult IAS not respected in the CONSOB resolution (easy: IAS 2, IAS 8, IAS 10, IAS 11, IAS 12, IAS 16, IAS 18, IAS 27, IAS 28, IAS 36 and IFRS 4; and IFRS 13) 0 if the restatement is a RFS 0 if there is not a restatement |
| Number of difficult-to-estimate IFRS | Number of difficult-to-estimate IFRS (based on above definition) included in the CONSOB resolution and considered with errors; 0 if there are not difficult-to-estimate IFRS included in the CONSOB resolution 0 if the restatement is a RFS 0 if there is not a restatement |
| Control variables | |
| Type of financial statement | Dummy variable for each type of financial statement: separate, consolidate or interim |
| Number of IFRS | Number of IFRS included in the CONSOB resolution and considered with errors 0 if the restatement is a RFS, and 0 if there is no restatement |
| No press release | 1 if the company’s does not have available a press release with the restated financial statement; 0 if there is a press release, and 0 if the restatement is a RFS 0 if there is not a restatement |
| Time resolution_FS | (Year of CONSOB resolution or annual report − year of the financial statement with errors) |
| Size | Natural logarithm of total assets from the financial statement under investigation |
| ROA | Operating income/total assets from the financial statement under investigation |
| Bankruptcy | 1 if the company has been declared bankrupt in the year; 0 otherwise |
| Industry | Industry fixed effect |
| FR | 1 if the financial statement is a financial statement where CONSOB discovers material misstatements; and 0 if it is a financial statement of a control firm that have never had a FR (matched by industry-year-type of FS) |
| Year of FS | Year fixed effect |
| CEO/chairman dismissal | 1 if the CEO/chairman was dismissed within 24 months from CONSOB disclosure; 0 otherwise |
| CN | 1 if the restatement is a CN; 0 if the restatement is a RFS and 0 if there is not a restatement |
| Severity of balance sheet | Absolute value of (total asset with errors − total asset restated)/(total asset restated) |
| Severity of income statement | Absolute value of (net income with errors − net income restated)/(net income restated) |
| Great severity of FR | 1 if at least one of severity BS or severity IS is above the median (2% for change in total assets and 17% for change in net income) and 0 otherwise |
| FR, which increases income | 1 if there is an increase in the net income in the restated financial statement; 0 otherwise |
| FR, which decreases income | 1 if there is a decrease in the net income in the restated financial statement; 0 otherwise |
| FR, which does not change income | 1 if there is not a variation in the net income in the restated financial statement; 0 otherwise |
| Difficult-to-estimate IFRS | 1 if there is the indication of at least one difficult IAS not respected in the CONSOB resolution (difficult: IAS 37, IAS 38, IAS 39 and IFRS 7) |
| Number of difficult-to-estimate IFRS | Number of difficult-to-estimate IFRS (based on above definition) included in the CONSOB resolution and considered with errors; 0 if there are not difficult-to-estimate IFRS included in the CONSOB resolution |
| Type of financial statement | Dummy variable for each type of financial statement: separate, consolidate or interim |
| Number of IFRS | Number of IFRS included in the CONSOB resolution and considered with errors |
| No press release | 1 if the company’s does not have available a press release with the restated financial statement; 0 if there is a press release, and 0 if the restatement is a RFS |
| Time resolution_FS | (Year of CONSOB resolution or annual report − year of the financial statement with errors) |
| Size | Natural logarithm of total assets from the financial statement under investigation |
| ROA | Operating income/total assets from the financial statement under investigation |
| Bankruptcy | 1 if the company has been declared bankrupt in the year; 0 otherwise |
| Industry | Industry fixed effect |
| FR | 1 if the financial statement is a financial statement where CONSOB discovers material misstatements; and 0 if it is a financial statement of a control firm that have never had a FR (matched by industry-year-type of FS) |
| Year of FS | Year fixed effect |
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