The role of corporate governance during the pre- and post-Sarbanes Oxley periods

Anthony C. Ng and Yaw M. Mensah

International Journal of Corporate Governance, 2010, vol. 2, issue 1, 58-86

Abstract: This study examines the joint effects of the passing of Sarbanes-Oxley Act (SOX) of 2002 and firm-specific corporate governance mechanisms on the value-relevance of earnings. We find that value-relevance of earnings is significantly different for different sub-periods. We find that good corporate governance (proxied by lack of anti-takeover provisions) has a positive impact on the value-relevance of earnings only during the scandal (SCA) period. These results hold after controlling for changes in institutional ownership and earnings quality (EQ). Our results suggest that there is a substitution effect between good firm-specific corporate governance mechanisms and the strictness of the regulatory environment.

Keywords: corporate governance; earnings quality; earnings value-relevance; Sarbanes-Oxley Act; SOX; institutional ownership; regulatory environment. (search for similar items in EconPapers)
Date: 2010
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Persistent link: https://EconPapers.repec.org/RePEc:ids:ijcgov:v:2:y:2010:i:1:p:58-86

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