“An analysis of the paper The Financial and Market Effect of the SECs Accounting and Auditing Enforcement Releases. E. H. Feroz, K, Park, and V. S. Pastena. Journal of Accountancy Research 29(1991): 107-142. (Critique of W2)”

In the paper The Financial and Market Effects of the SECs Accounting and Auditing Enforcement Releases, authors Ehsan H. Feroz, Kyungjoo Park and Victor S. Panstena explored the effects related to the SECs Accounting and Auditing Enforcement Releases(AAERs). Feroz, Park and Pastena used the information from SEC to describe the content of AAERs and used the data from reliable sources like the Wall Street Journal, Funk and Scotts Index to analyze the reactions of the auditors and companies to the disclosure of SEC investigations. The authors also provided many AAERs cases in the article.

In the research, Feroz, Park and Pastena studied 188 companies and came up with some conclusion. SEC was more likely to report the overstatements of receivables and inventory. More than 50% of the alleged reporting violations are overstatements of receivables and 24% of those are related t…(short extract)