讲座题目：In financial statements we trust: Institutional investors’ stockholdings after restatements
Li Chen is a Senior Lecturer at the Department of Accounting and Finance, University of Auckland. Her research interests are in the areas of financial reporting, financial and non-financial disclosures, financial analysts, and capital markets. Her research has been published in journals such as Accounting, Organizations and Society, Journal of Banking and Finance, Journal of Business Ethics, and Accounting and Finance.
Prior research examines the role of trust in financial settings and finds that investors in areas with high societal trust place more weight on accounting information, consistent with these investors attaching a lower probability to managerial opportunism and misreporting. However, when the trust relationship between the firm and its outside investors experiences a shock as in an accounting restatement, it is not clear whether high or low trust investors will react more negatively to that shock. We test two competing hypotheses based on confirmatory bias and unmet expectations, and find the change in institutional investors’ shareholdings around the restatement is more negative for investors from high social trust areas compared to low social trust areas. This is consistent with the unmet expectations view where institutional investors from high social trust areas having higher expectations regarding managers’ faithful reporting which makes them more surprised and disappointed when a restatement does occur.