 Financial restatements and Sarbanes–Oxley: Impact on Canadian firm governance and management turnoverLawrence Kryzanowski and Ying Zhang Journal of Corporate Finance, 2013, vol. 21, issue C, 87-105 Abstract: Canadian firms have different roots (e.g., more concentrated ownership and smaller size) than U.S. firms and Canadian regulatory enforcement follows a different route (principle- versus rule-based) that embodies the underlying intent of Sarbanes–Oxley (SOX). Financial restatements are more likely when Canadian firms have lower blockholder or management ownerships, lower proportions of unrelated directors, no financial savvy audit committee members and are not audited by prestigious auditing firms. To signal that they are dealing with the impact of agency problems on cash flow uncertainties, restating firms exhibit significantly higher turnovers of CEOs, CFOs and external auditors post-restatement, and they converge towards control-group governance post-restatement by making changes to the identified determinants of financial restatement likelihood. Consistent with prior results for U.S. firms, SOX had a small (extraterritorial) impact on the likelihood of post-restatement turnovers of management and other corporate overseers for Canadian restating firms. Keywords: Financial restatements; Corporate governance; Ownership; Management turnover; SOX (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:corfin:v:21:y:2013:i:c:p:87-105 DOI: 10.1016/j.jcorpfin.2013.01.007 Access Statistics for this article Journal of Corporate Finance is currently edited by A. Poulsen and J. Netter More articles in Journal of Corporate Finance from Elsevier |
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