Market Reaction to Events Surrounding the Sarbanes-Oxley Act of 2002 and Earnings Management PDF Download
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Author: Haidan Li
Publisher:
ISBN:
Category :
Languages : en
Pages : 36
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Book Description
The Sarbanes-Oxley Act of 2002 (SOX) is the most important legislation affecting corporate financial reporting enacted in the United States since the 1930s. Its purpose is to improve the accuracy and reliability of accounting information reported to investors. We examine stock price reactions to legislative events surrounding SOX, and focus on whether such stock price effects are related cross-sectionally to the extent firms had managed their earnings. Our univariate results indicate significantly positive abnormal stock returns associated with SOX events, and our primary analyses reveal considerable evidence of a positive relation between SOX event stock returns and extent of earnings management. These results are consistent with investors anticipating that SOX would constrain earnings management and enhance the quality of financial statement information more, the more firms had managed their earnings.
Author: Haidan Li
Publisher:
ISBN:
Category :
Languages : en
Pages : 36
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Book Description
The Sarbanes-Oxley Act of 2002 (SOX) is the most important legislation affecting corporate financial reporting enacted in the United States since the 1930s. Its purpose is to improve the accuracy and reliability of accounting information reported to investors. We examine stock price reactions to legislative events surrounding SOX, and focus on whether such stock price effects are related cross-sectionally to the extent firms had managed their earnings. Our univariate results indicate significantly positive abnormal stock returns associated with SOX events, and our primary analyses reveal considerable evidence of a positive relation between SOX event stock returns and extent of earnings management. These results are consistent with investors anticipating that SOX would constrain earnings management and enhance the quality of financial statement information more, the more firms had managed their earnings.
Author: Rexon Tayong Nting
Publisher:
ISBN:
Category :
Languages : en
Pages :
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Book Description
The empirical motivation of this dissertation is the increasing importance of financialmarket?s regulation pursuant of the Sarbanes Oxley Act of 2002 (SOX). There is currentlyincomplete knowledge on the relationship between insider trading and earningsmanagement on the one hand and earnings management and firm performance on the otherin light of the recent regulatory intervention (SOX). Moreover, the relevance of politicalregulation of financial markets has not yet been thoroughly investigated. The research aims of the dissertation are: 1) To evaluate the effectiveness of financialmarket regulation (SOX) on Insider trading and Earnings management 2) To empiricallyexamine how the different techniques used to manage earnings influence firm performancein light of the recent regulatory intervention (SOX). Both tests suggest ways in whichinvestors can examine and unravel a comprehensive set of earnings management signalsand their impact on either insider trading or future firm performance. The thesis is divided into two main empirical chapters: The first main empirical chapter(chapter 4) discusses insider trading and earnings management in light of the recentregulatory intervention mandated by the SOX. The second main empirical chapter (Chapter5) discuss changes in earnings management and firm performance relationship in light ofthe recent regulatory intervention as prescribed by SOX. In an attempt to obtain acomprehensive understanding of several conceptual issues, the different techniques used tomanage earnings are employed including, discretionary accruals techniques, real earningsmanagement and the probability of financial statements distortion as measured by theBeneish M-Score. Overall, the focus is on managers of S & P 500 companies, holders ofprivate information about the firm?s prospects, preparers and senders of financial reportsand investors and analysts as receivers and users of these financial statements. Findings on the relationship between insider trading and earnings management in light ofthe recent regulatory intervention suggest that after the Sarbanes Oxley Act of 2002,managers are less likely to time their trade and boast earnings to benefit at the expense ofoutside investors. Furthermore, under stricter regulations, market participants detect andreact to insider trading and earnings management practices. Findings on the relationship between a comprehensive set of earnings management signalsand firm performance suggest that there have been greater monitoring of financialIIIstatements in the Post SOX era. When firms attempt to manage earnings during periods ofintense market regulation, investors discount this through disappointing stock returns. Overall, the results suggest that there should be broad based approach in analysingfinancial statements.
Author: Patricia M. Dechow
Publisher: Research Foundation of the Institute of Chartered Financial Analysts
ISBN: 9780943205687
Category : Corporate profits
Languages : en
Pages : 152
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Book Description
Author: Joshua Ronen
Publisher: Springer Science & Business Media
ISBN: 0387257713
Category : Business & Economics
Languages : en
Pages : 587
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Book Description
This book is a study of earnings management, aimed at scholars and professionals in accounting, finance, economics, and law. The authors address research questions including: Why are earnings so important that firms feel compelled to manipulate them? What set of circumstances will induce earnings management? How will the interaction among management, boards of directors, investors, employees, suppliers, customers and regulators affect earnings management? How to design empirical research addressing earnings management? What are the limitations and strengths of current empirical models?
Author: Barry Leonard
Publisher: DIANE Publishing
ISBN: 1437924549
Category : Business & Economics
Languages : en
Pages : 139
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Book Description
The Public Co. Accounting Reform and Investor Protection Act, otherwise known as the Sarbanes-Oxley Act, was enacted in July 2002 after a series of high-profile corp. scandals involving Enron and Worldcom. Section 404(a) of the Act requires management to assess and report on the effectiveness of internal control over financial reporting. It also requires that an independent auditor attest to management¿s assessment of the effectiveness of those controls. Efforts to reduce the costs while retaining the effectiveness of compliance resulted in a series of reforms in 2007. This report presents an analysis of data from publicly traded co. collected from a survey of financial exec. of co. with Section 404 experience. Charts. This is a print on demand report.
Author: Susan M. Gates
Publisher: Rand Corporation
ISBN: 0833043951
Category : Law
Languages : en
Pages : 369
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Book Description
What are the differential effects of regulation and policy on small businesses? What is the impact of special regulatory treatment for small businesses? This book sheds light on these issues through analysis of the regulatory and public policy environment with regard to small businesses, including focused studies in four key areas: health insurance, workplace safety, corporate governance, and business organization.
Author:
Publisher:
ISBN:
Category : Corporate governance
Languages : en
Pages : 324
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Book Description
Author: Roger C. Graham
Publisher:
ISBN:
Category :
Languages : en
Pages :
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Book Description
This study examines the effect of the Sarbanes-Oxley Act of 2002 (SOX) on accounting distortions in the context of the earnings quality of high-growth firms relative to lower-growth firms. High-growth creates unique management and reporting challenges that can contribute to accounting-related distortions. SOX, with its emphasis on financial reporting, control systems, and management responsibility could have been particularly relevant for high-growth firms with such challenges. Test results indicate a stronger reduction (weaker increase) in accounting distortions related to total accruals and book-tax differences (performance-matched modified Jones discretionary accruals) for high-growth firms from the pre- to the post-SOX period relative to lower-growth firms. Other tests indicate that the relation between accounting returns and market returns strengthened for high-growth firms in the period after SOX, but not for lower-growth firms. These results suggest greater reductions in accounting distortions and related improvements in reporting quality for high-growth firms relative to other firms coinciding with the post-SOX period.
Author: Yale Law Journal
Publisher: Quid Pro Books
ISBN: 1610278496
Category : Law
Languages : en
Pages : 455
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Book Description
The contents of the January-February 2015 issue of the Yale Law Journal (Volume 124, Number 4) are: Articles: • "Cost-Benefit Analysis of Financial Regulation: Case Studies and Implications," John C. Coates IV • "Beyond the Indian Commerce Clause," Gregory Ablavsky Essays: • "On Evidence: Proving Frye as a Matter of Law, Science, and History," Jill Lepore • "The End of Jurisprudence," Scott Hershovitz Notes: • "Against the Tide: Connecticut Oystering, Hybrid Property, and the Survival of the Commons," Zachary C.M. Arnold • "Perceptions of Taxing and Spending: A Survey Experiment," Conor Clarke & Edward Fox Comments: • "The Psychology of Punishment and the Puzzle of Why Tortfeasor Death Defeats Liability for Punitive Damages," Roseanna Sommers • "The Case for Regulating Fully Autonomous Weapons," John Lewis • "From Child Protection to Children's Rights: Rethinking Homosexual Propaganda Bans in Human Rights Law," Ryan Thoreson Quality ebook formatting includes fully linked footnotes and an active Table of Contents (including linked Contents for all individual Articles, Notes, and Essays), proper Bluebook formatting, and active URLs in footnotes.
Author: Cheng F. Lee
Publisher: Center for PBBEFR & Airiti Press
ISBN: 9866286657
Category : Business & Economics
Languages : en
Pages :
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Book Description
Advances in Quantitative Analysis of Finance and Accounting (New Series) is an annual publication designed to disseminate developments in the quantitative analysis of finance and accounting. The publication is a forum for statistical and quantitative analyses of issues in finance and accounting as well as applications of quantitative methods to problems in financial management, financial accounting, and business management. The objective is to promote interaction between academic research in finance and accounting and applied research in the financial community and the accounting profession.
