Journal article
CEOs'/CFOs' Swearing by the Numbers: Does It Impact Share Price of the Firm?
The Accounting review, v 81(1), pp 1-27
01 Jan 2006
Abstract
We examine the impact on share prices of firms whose CEOs and CFOs certify their financial statements under oath, pursuant to the administrative order issued by the SEC on June 27, 2002. We hypothesize that (1) the certification provides assurance to investors by making disclosure more credible and by reducing information asymmetry between owners and management, and (2) the assurance value of certification is reflected in the stock price of the certifying company. Overall, the empirical results are consistent with our hypotheses. We observe, on average, positive abnormal returns for firms whose CEOs/CFOs certified their financial statements by August 14, 2002. Based on an analysis of bid-ask spreads, certifying firms experienced a significant decline in information asymmetry after certification. In cross-sectional analyses, we find abnormal returns are positively associated with firms that were under investigation, that used Andersen as their auditor, and that practiced aggressive revenue recognition.
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Details
- Title
- CEOs'/CFOs' Swearing by the Numbers: Does It Impact Share Price of the Firm?
- Creators
- Hsihui Chang - University of California, RiversideJengfang Chen - National Dong Hwa UniversityWoody M. Liao - University of California, RiversideBirendra K. Mishra - University of California, Riverside
- Publication Details
- The Accounting review, v 81(1), pp 1-27
- Publisher
- American Accounting Association
- Resource Type
- Journal article
- Language
- English
- Academic Unit
- Accounting
- Web of Science ID
- WOS:000235173700001
- Scopus ID
- 2-s2.0-33644679882
- Other Identifier
- 991020534931304721
InCites Highlights
Data related to this publication, from InCites Benchmarking & Analytics tool:
- Web of Science research areas
- Business, Finance