FINANCIAL RESTATEMENT AND EQUITY VALUE: MODERATING ROLE OF OWNERSHIP DIVERSITY

Abstract

Financial restatement represents a company's endeavor to produce trustworthy financial statements or fraudulent behavior, including the abuse of financial data. Using a panel regression analysis of 1,155 firm-years of publicly traded Malaysian enterprises, this study concludes that financial restatement is value enhancing and ethnic diversity of ownership further increases the equity valuation of the restatement. The results support the value relevance and upper-echelon theories, which assert that ethnic diversity of ownership increases shareholder value. The findings also benefit regulators and policymakers when examining and modifying governance policies to improve ethnic diversity and inclusion.