Sarbanes–Oxley Section 406 Code of Ethics for Senior Financial Officers and Firm Behavior

Saurabh Ahluwalia, O. C. Ferrell (), Linda Ferrell () and Terri L. Rittenburg ()
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O. C. Ferrell: Belmont University
Linda Ferrell: Belmont University
Terri L. Rittenburg: University of Wyoming

Journal of Business Ethics, 2018, vol. 151, issue 3, No 6, 693-705

Abstract: Abstract Sarbanes–Oxley Section 406 requires a code of ethics for top financial and accounting officers in public companies. The objective of this research is to discover the impact of a financial code of ethics on firm behavior. We performed a longitudinal tracking of firm adoption of a financial code of ethics starting in 2005. We checked these companies’ codes again in 2011 to confirm their continued implementation. Financial restatements were used as a dependent variable to measure improved financial reporting after the adoption of the financial codes. The results confirm that the adoption of a financial code of ethics improves the integrity of financial reporting.

Keywords: Code of ethics for financial officers; Financial reporting; Restatements; Sarbanes–Oxley; Section 406 (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (10)

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DOI: 10.1007/s10551-016-3267-7

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