Section 404 of the Sarbanes-Oxley Act (SOX) requires every company to report on the effectiveness of internal controls over financial reporting. Section 404 has arguably been the most controversial provision of SOX, with many registrants complaining that the high cost of compliance outweighs its...

We document that accrual-based earnings management increased steadily from 1987 until the passage of the Sarbanes Oxley Act (SOX) in 2002, followed by a significant decline after the passage of SOX. Conversely, the level of real earnings management activities declined prior to SOX and increased...

Archival studies document an asymmetrically strong market reaction to positive vis-agrave;-vis negative earnings surprises. This finding appears inconsistent with the well-known effect of loss aversion and remains unexplained. I contend that this reaction pattern can arise when investors'...

We examine analysts' incentive to avoid negative earnings surprises by testing the effect of investment banking relationships on analysts' tendency to issue EPS forecasts that management ultimately can meet or beat. Using 19,014 sample firm-quarters for the 1991-2002 period, we find that firms...

This paper uses several approaches to assess the impact of the Security and Exchange Commission's (SEC) scrutiny of firms' purchase accounting and in-process research and development (IPRamp;D) write-offs taken during 1997 and 1998. Using hand collected data, I examine the characteristics of...

This paper examines the implications of the off-balance-sheet treatment of operating leases for future earnings and stock returns. The property rights granted by an operating lease contract generate both future benefits (off-balance-sheet capital investment) and future obligations...

This study documents evidence consistent with herding in voluntary disclosure decisions in the context of capital expenditure forecasts and investigates two possible reasons for this behavior. Theories of rational herds suggest that herding in disclosure decisions may be due to either (1) the...

The aim of this paper is to provide some arguments for the effects of the adoption of the International Accounting Standards on firms. Therefore, IAS impact on firms' management and financial statements are analysed. Provided financial statements intend to support or reject findings in the...