The Effect of Information Content on Announcement of Amending Financial Statements on Stock Prices: An Empirical Study on Companies Registered in the Egyptian Stock Market

The study aimed to test the reaction of the stock market to the announcement of the restatement of financial statements by examining the degree of response of stock prices when announced about the restatement of financial statements for a sample of 86 Egyptian companies listed in the stock market during the period from 2011 to 2014. The study used the style of the event study to test the hypothesis is of the study, where as the results showed that there was a significant negative effect of the content of the informational announcement of restatement the financial statements on the stock prices of the company. Where as it is considered that restatement of the financial statements as a negative indicator by investors, and they are more doubt and concern about the credibility and accuracy of financial statements and accounting practices for those companies that have restate its financial statements. Therefore the restatement of financial statements causes the collapse of investor confidence in the stock market, which creates a negative impact on the stock prices. The results of the statistical analysis showed a decrease of average normal returns of stocks, as well as decrease of average cumulative returns after the announcement of the restatement to the Financial Statements.