Must-Read: Gene D’Avolio, Efi Gildor, and Andrei Shleifer (2001): Technology, Information Production, and Market Efficiency

Must-Read: Gene D’Avolio, Efi Gildor, and Andrei Shleifer (2001): Technology, Information Production, and Market Efficiency:

A recent study by Financial Executives International (FEI) and NYU graduate student Min Wu… associate[s] these [earnings] restatements with losses of market value of $31.2 billion in 2000, $24.2 billion in 1999, and $17.7 billion in 1998…

…The largest event involved Microstrategy (MSTR), whose stock fell by $11.9 billion over three days surrounding a revenue recognition based restatement of earnings. Two-thirds of all restatements are by Nasdaq firms. This is partly driven by the disproportionate number of restatements in the computer manufacturing and software industries. Arthur Andersen finds that these two segments accounted for 27 per- cent of all restatements from 1997 to 2000…