Mandatory financial reporting for public companies is intended to increase transparency
for shareholders. If a business can raise capital from the public, it was decided that the public had
a right to information about the operations of the business they were investing in. However, the
creation of mandatory financial reporting was not an absolute solution. Since then, there have
been multiple instances of accounting mistakes and fraud that require an accounting restatement.
Such market events yield a market response measured by stock price changes. Market responses
are commonly researched, but they have not been considered among different industries. This
study intends to address a current gap in research by examining the financial market reaction to
significant market events among firms with notable intangible value. I accomplish this with an
event study following accounting restatement dates. This thesis examines the hypothesis that the
financial market is significantly less reactive to restatements in industries with significant
intangible value. I use statistical analysis tools including a two-sample t-test, a regression model,
a correlation analysis, and a quintile analysis. The research results do not yield a significant
difference to support the hypothesis, but compelling motivation for future research was
Key Words: Creative industry, intangible assets, accounting restatements, market events
Designing Discipline: How does the market react to accounting restatements in industries with significant intangible value?.
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