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Shorting Companies That Restate Previously Issued Financial Statements

Journal Article
The article presents a study which investigates the stock market's reaction to the U.S. Securities and Stock Commission's new Form 8-K disclosure, which is required when a company learns that previously issued financial statements are not reliable. The authors investigate whether stock prices indeed decline when firms announce that investors cannot rely on their previously issued financial statements. It further examines whether the decline is limited only to the short window around the announcement or continues afterwards.