Abstract

Objective: This study aims to examine the impact of mandatory and voluntary restatements of financial statements on the process of managerial learning from the market in companies listed on the Tehran Stock Exchange. The significance of this topic lies in the fact that the type of financial information disclosure can influence market reactions and managerial investment behavior in different ways.

Method: This study is applied in nature and follows a descriptive–correlational approach. The statistical population includes all firms listed on the Tehran Stock Exchange during 2010–2023. After applying screening criteria, a final sample of 138 firms was selected to test the hypotheses. The data were analyzed using multivariate regression models controlling for year and industry effects. Furthermore, to ensure robustness, sensitivity analyses and dynamic estimations were conducted using the Generalized Method of Moments (GMM).

Findings: The results of the model estimations revealed that market feedback has a positive and significant effect on firms’ future investment expenditures, indicating the existence of a managerial learning process from the market among the sampled firms. Regarding the origin of restatements, the findings of the second model showed that mandatory restatements—whether directly or through their interaction with market feedback—have no significant effect on investment decisions or managerial learning. In contrast, voluntary restatements, with a positive and significant coefficient, enhance the managerial learning process from the market.

Innovation: This study demonstrates for the first time that the type of financial statement disclosure can influence managerial learning from the market and the effectiveness of investment decision-making.