The Relationship between EPS Restatement Size and Stock Return and P/E Ratio in Tehran Stock Exchange

This study investigates the relationship between EPS restatement size and stock return and P/E ratio from one hand and the difference between P/E ratios of two groups of companies with restated and without restated earnings. Restated earnings are an index determining the precision and accuracy of information presented during past periods. Investigating a sample of 70 registered companies in Tehran stock exchange and using regression method, we concluded that there is no significant relationship between EPS restatement size and P/E ratios, but there is a significant relationship between EPS restatement size and earnings return. We also concluded that there is significant difference between companies with and without EPS restatement.