The Economic Consequences of Financial Restatements

The main purpose of research is to study the economic impact of representation of financial statements on companies listed on the Tehran Stock Exchange. Information required for the study, 150 companies during 1390-1397 years has been retrieved from different resources. In this study, for economic consequences variable, cost of equity and the ratio of market value to book value and for representation of financial statements variable, two criteria zero-one dummy and severity of representation of financial statements variable were used. For examination of the hypotheses, multivariate regression with panel data was used. The findings of this study showed that with representation of financial statements the cost of equity was increased and stock market value of companies listed in Tehran Stock Exchange was decreased. In other words, the representation of financial statements entails negative consequences.