 The mitigation of high-growth-related accounting distortions after sarbanes-oxleyRoger C. Graham and Jared A. Moore Research in Accounting Regulation, 2018, vol. 30, issue 2, 82-94 Abstract: 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. Date: 2018 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:reacre:v:30:y:2018:i:2:p:82-94 DOI: 10.1016/j.racreg.2018.09.009 Access Statistics for this article Research in Accounting Regulation is currently edited by G. Previts More articles in Research in Accounting Regulation from Elsevier |
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