The role of investor relations firms in financial restatements
Date of Issue2016-11-22
College of Business (Nanyang Business School)
This study examines the role of investor relations (IR) firms in the setting of financial restatements. I find that firms hiring an outside IR firm experience higher restatement announcement returns and they do not realize lower post-announcement stock returns than propensity-score matched control firms. The positive impact of IR is greater for firms with low analyst coverage and low media coverage. My findings suggest that IR professionals increase value for their clients by helping them communicate effectively during periods of crises.