Journal article
Sarbanes-Oxley Act, perceived earnings quality and cost of capital
Review of accounting & finance, v 8(3), pp 216-231
01 Jan 2009
Abstract
Purpose - The purpose of this paper is to investigate the impact of the Sarbanes- Oxley Act (SOX) on market- based measures of earnings quality and cost of capital.
Design/methodology/approach - The paper uses empirical data to determine measures for the market's perception of earnings quality and the ex-ante cost of capital. The measures for 2001 (pre-SOX) are compared to the measures for 2003 (post-SOX).
Findings - The results indicate that in the post-SOX period, the market's perception of earnings quality has improved, while the firms' cost of equity capital has decreased.
Research limitations/implications - At a time when debate is raging as to the overall impact of SOX on the US economy, this study provides some evidence as to its beneficial nature. A limitation is that the method of computing restricts the sample, potentially creating biases.
Originality/value - This is the first study to investigate the impact of SOX on the market's perception of earnings quality and the firms' cost of equity capital.
Metrics
Details
- Title
- Sarbanes-Oxley Act, perceived earnings quality and cost of capital
- Creators
- Hsihui Chang - Drexel UniversityGuy D. Fernando - SUNY Albany, Dept Accounting & Law, Sch Business, Albany, NY 12222 USAWoody Liao - Univ Calif Riverside, Anderson Grad Sch Management, Riverside, CA 92521 USA
- Publication Details
- Review of accounting & finance, v 8(3), pp 216-231
- Publisher
- Emerald Group Publishing
- Number of pages
- 17
- Resource Type
- Journal article
- Language
- English
- Academic Unit
- Accounting
- Web of Science ID
- WOS:000212408300001
- Scopus ID
- 2-s2.0-84992933803
- Other Identifier
- 991019168203204721
InCites Highlights
Data related to this publication, from InCites Benchmarking & Analytics tool:
- Collaboration types
- Domestic collaboration
- Web of Science research areas
- Business, Finance