A restatement is announced in a form-8-k stating that prior statements should not be relied upon, followed by amended filings. Causes range from a genuine technical error to revenue recognition failures and outright fraud.
Markets treat restatements harshly and usually correctly, because the disclosure destroys the assumption that the numbers behind every valuation model were accurate. Recovery in the multiple typically takes years, not quarters.
Example: a Northwind competitor restates two years of revenue after booking distributor shipments as final sales. The correction cuts cumulative revenue by 4% and the shares fall 31% on the announcement.
Related: earnings-quality, auditor-opinion, form-8-k, channel-stuffing, accruals-ratio