Skip to main content

Table 9 Variable Definitions

From: Double trouble? IRS’s attention to financial accounting restatements

ABV AVE ATENTION An indicator variable set equal to one if ATTENTION in year t is greater than the average three-month downloads of year t-1.
ATTENTION The amount of IRS downloads for the three-month window following a restatement in the restatement year and in all other firm-years.
BIG R An indicator variable equal to one if the company issues a 4.02 8-K revision, zero otherwise.
BTD Pretax income (PI) minus current domestic and foreign tax expense (TXFED + TXFO) grossed up by 35%, scaled by assets (AT).
CAPITAL INTENSITY Net property, plant, and equipment (PPENT) divided by lagged total assets (AT).
CASH Cash holdings (CH) scaled by lagged total assets (AT).
CASH ETR Taxes paid (TXPD) divided by pretax book income net of special items (PI-SPI).
DTA Net deferred tax assets (TXNDBA) scaled by total assets (AT).
DTL Net deferred tax liabilities (TXNDBL) scaled by total assets (AT).
ERRORS An indicator variable set equal to one in which a restatement is attributable to an error and zero otherwise.
F-SCORE We first calculate the predicted value (PV) of an accounting misstatement following model 1 of Panel A of Table 7 of Dechow et al. (2011). The probability of misstatement is then calculated as PR = ePV/(1 + ePV). Finally, F-SCORE =PR/0.0037.
FORMS The total number of new filings for firm i of month m available for download on EDGAR.
FRAUD An indicator variable set equal to one during the restatement windows attributable to fraud and zero otherwise.
GAAP ETR Total tax expense (TXT) divided by pretax book income net of special items (PI-SPI).
ICW An indicator variable set equal to one for firm-year observations that disclose a material weakness and zero otherwise.
ICW TOTAL The total number of material weakness disclosed by a firm for a given firm-year observation.
INTANGIBLE INTENSITY Intangible assets (INTAN) divided by lagged total assets (AT); missing values set equal to zero.
INVENTORY INTENSITY Inventory (INVT) divided by lagged total assets (AT).
IRS AUDIT REF An indicator equal to one if the firm referred to a tax audit in its 10-K and zero otherwise
IRS DOWNLOAD BREADTH The number of downloads of unique accession numbers by IP addresses belonging to the IRS during month m of year t for firm i.
IRS DOWNLOAD TYPE The number of downloads of the different form types by IP addresses belonging to the IRS during month m of year t for firm i.
IRS DOWNLOADS The total number of downloads made by IP addresses belonging to the IRS during month m of year t for firm i.
LENGTH Measured as the length of time it takes the IRS to download one public filing of a restating firm following a press release or media article covering the restatement
LEV Long-term debt (DLTT) divided by lagged total assets (AT).
MTB Number of shares outstanding at the end of the year multiplied by the price per share at year end divided by book value of equity (PRCC_F*CSHO/CEQ).
MNE An indicator variable set equal to one if a firm is not missing pre-tax foreign income (PIFO), indicating a multinational firm.
NOL CHANGE Change in the tax loss carryforward (TLCF) divided by total assets (AT).
R&D INTENSITY R&D expense (XRD) divided by sales (SALE); missing values set equal to zero.
RESTATE An indicator variable equal to one for all firm-month or firm-year observations with a restatement and zero otherwise.
ROA Pretax book income (PI) divided by total assets (AT).
SALES GROWTH The change is sales (SALE) scaled by the prior year.
SETTLE Measured as the aggregate amount of settlements made by a firm from years t + 1 to t + 4 and to t + 5 scaled by year end UTBs (TXTUBEN).
SIZE The log of total assets (AT) as of the end of the year.
SPEED Measured as the number of days it takes the IRS to download the form announcing a restatement.
UTB Year-end UTBs (TXTUBEN) divided by total assets (AT).
10-K An indicator variable equal to one if a 10-K is released during the month.
10-Q An indicator variable equal to one if a 10-Q is released during the month.
FORMS The total number of new forms available for download for firm i during each month m over our entire sample period.