The chart below summarizes the U.S. exchange traded companies that issued corrections to their financial statements during the years 2001 through 2014. The data was compiled by Audit Analytics and published in April, 2015.

Why do you think the number of financial statement restatements increased so dramatically from 2004 to 2006, dropping off in later years? Discuss how you think the capital markets respond to financial statement restatements.

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Year # of Unique Firms # of Restatements 2001 589 625 2002 653 701 2003 735 789 2004 859 937 2005 1,426 1,573 2006 1,615 1,842 2007 1,146 1,271 2008 834 930 2009 707 761 2010 789 836. 2011 774 848 2012 796 851 2013 782 867 2014. 746 831