Earnings informativeness, earnings management and corporate governance under the Sarbanes-Oxley Act of 2002.

摘要

The purpose of this study is to examine whether the disclosure of accounting-related corporate governance mandated by the Sarbanes-Oxley Act of 2002 (SOX) improves the credibility of financial reporting for both U.S. and foreign firms, respectively. I first examine the marginal effect of the market reaction to the earnings announcements, conditioned on the disclosure of audit committee independence and other accounting-related corporate governance variables. Second, I investigate the impact of SOX on the effectiveness of audit committee and other accounting-related corporate governance variables in monitoring the quality of accounting earnings. My findings show a significant and positive (negative) relationship between earnings informativeness (earnings management) and a fully independent audit committee in the post-SOX 2002--2003 periods. Also, audit committee independence and board independence complement each other vis-a-vis earnings informativeness and earnings management. Moreover, the earnings informativeness (earnings management) is also positively (negatively) related to the disclosure of financial experts with accounting background or experience in U.S. firms in the post-SOX periods. On the other hand, I find that earnings informativeness is significantly and negatively related to the dual role of the CEO who also serves as the chair of the board (duality of the CEO). Then, the relationship between earnings management and the duality of the CEO is positively significant in U.S. firms but insignificant in foreign firms.;By comparison, the results show a significant and positive (negative) relationship between earnings informativeness (earnings management) and board independence in the pre-SOX 2001--2002 periods. There is little evidence that earnings informativeness (earnings management) is related to audit committee independence and other corporate governance variables prior to SOX.;Overall, individual weaker corporate governance variables could complement each other to form better governance functions in monitoring accounting information prior to SOX. The Act improves individual corporate governance variables to form strong corporate governance mechanisms in ensuring the quality of accounting information after the passage of SOX.