The Sarbanes-Oxley Act and Accounting Quality: A Comprehensive Examination

Abstract

This paper investigates the impact of the Sarbanes-Oxley (SOX) Act on the quality of fmancial statement information. Where other papers have only investigated the short-term effects of SOX, this paper takes a longer post-SOX period. A distinction is also made between technology and non-technology based firms. Earnings management, conservatism and value relevance measures were used in order to examine the impact of SOX on accounting quality. A significant increase was found on both the earnings management and value relevance measures, which was persistent over a four-year post-SOX period. On the contrary, a slight increase in conservatism was observed, however these results are not significant. Moreover, the technology based firms score worse on the earnings management measure, thus, the separate investigation between technology and non-technology based firms has revealed interesting information which would otherwise have stayed undetected. [ABSTRACT FROM AUTHOR] Copyright of International Journal of Economics & Finance is the property of Canadian Center of Science & Education and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)