Labor market outcomes of restatements for corporate accountants

This study examines the impact of restatements on the labor market outcomes for corporate accountants. I use LinkedIn to identify a comprehensive sample of corporate accountants who work for firms that restated their financial statements between 2004 and 2014. Using a difference-in-differences research design, I find that corporate accountants experience a higher turnover and a worse promotion prospect after restatements are announced, compared to a control sample of human resources professionals within the same firm. The increase in turnover is more pronounced for senior internal auditors, and in firms with more severe restatements. I also find that senior internal auditors experience a higher turnover but not a worse promotion prospect before restatements are announced, compared to senior corporate accountants. Overall, my findings suggest that corporate accountant experience adverse labor market outcomes after restatements are announced. Internal auditors could minimize the adverse labor market outcomes of restatements by proactively departing.