Company Events & EarningsCore researchlive in productionNew

Item 402 Non Reliance

Updated dailyData needs: mediumshort only

2008

Hennes, K. M., Leone, A. J., Miller, B. P. (2008). "The Importance of Distinguishing Errors from Irregularities in Restatement Research." The Accounting Review, 83(6), 1487-1519. Also GAO-03-138 (2003) "Financial Statement Restatements."

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In plain terms

When a company files an 8-K Item 4.02 saying its old financials shouldn't be trusted, the stock drops 8-15% in 3 days.

How it works

8-K Item 4.02 = "Non-Reliance on Previously Issued Financial Statements" — a restatement is coming. Hennes et al: -8% to -15% in 3-day window, drift continues 60-90d. Sparse but exceptionally clean.

Live results

0 times picked on its own · 1 times inside a blend (1 beat the stock) · updated 2026-06-06

This strategy is a frequent ingredient in blends that combine a few strategies on one stock. It has contributed to 1 such blended picks (1 of which beat simply holding the stock). Picking it on its own is only one of the ways it shows up.

How its picks scored vs. buy & hold

Each pick is graded on a recent year it was never tuned on, against simply owning the same stock

Where its edge concentrates

Share of picks in each company-size group that beat buy & hold

How often it trades

Active vs. patient. Bars on the left mean it waits for rare setups; bars on the right mean it trades often

Return vs. buy & hold

How much each pick beat or trailed simply owning the stock over the test year (extreme microcap moves trimmed)

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Data dependencies

SEC 8k events
Item-coded 8-K events (1.01 material agreements, 4.02 non-reliance, etc.).
Daily prices
Adjusted-close OHLCV for every US-listed ticker; primary price feed.

Expected edge

Reported return: -8% to -15% in 3d
Tested over: T+0 to T+90d

Hennes-Leone-Miller 2008: -8% to -15% in 3d, drift 60-90d. Reversal after 6+ months as details land.

Example tickers where this is likely to fire

LCID PLTR RIVN

Illustrative only, the signal fires based on the live data, not a fixed list.

Related families

Item 502 Executive DepartureCompany Events & Earnings

When a public company files an 8-K saying an executive is leaving, the stock typically drops 3% within 60 days.

Beneish M Score ShortPrice & Market Behavior

Eight accounting red flags (sales receivables stretching faster than sales, margin compression, asset-quality drift, leverage jumps, accruals piling up) are combined into a single score. When the score crosses the manipulator threshold and the price chart already agrees, that's a short setup.

Accruals QualityPrice & Market Behavior

Earnings backed by cash flow are repeatable; earnings backed by accruals (paper changes in receivables/inventory) fade. Short high-accrual names.

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