Avoiding Reputation Damage in Financial Restatements

The incidence of companies restating their financial results has recently been increasing steadily each year. This has resulted in the public trust in large companies being eroded, and in some cases, most notably Enron, the restatement has triggered the company's downfall. Corporate collapse is not always the result however. Companies can to some extent control the damage that a restatement inflicts on their market value. In this article, we outline which factors can aggravate this damage, and which actions can alleviate it.