The Sarbanes-Oxley Act (SOX) mandates management evaluation and independent audits of internal control effectiveness. The mandate is costly to firms but may yield benefits through lower information risk that translates into lower cost of equity. We use unaudited pre-SOX 404 disclosures and SOX...

Using a framework for evaluating corporate governance recently developed by Standard amp; Poor's, this study investigates whether firms that exhibit strong governance benefit from higher credit ratings relative to firms with weaker governance. We document, after controlling for risk...

This paper investigates the effect of internal control deficiencies and their remediation on accrual quality. We first document that firms reporting internal control deficiencies have lower quality accruals as measured by accrual noise and absolute abnormal accruals relative to firms not...

Note: This paper has been superseded by Gassen, LaFond, Skaife and Veenman: Illiquidity and Stock Price Synchronicity, lt;a href='http://ssrn.com/abstract=2405465'gt;http://ssrn.com/abstract=2405465lt;/agt;.Much of prior international accounting research implicitly assumes that stock prices...

We examine the relation between earnings smoothing, governance and liquidity for a sample of non-U.S. firms. We divide smoothing into innate and discretionary components, and find that discretionary smoothing is increasing in incentives to smooth (greater tax-book conformity, concentrated...

This paper uses firms' disclosures of internal control problems prior to audits mandated by Section 404 of the Sarbanes-Oxley Act (SOX) to investigate the economic factors that expose firms to internal control failure risks and managements' incentives to discover and report internal control...

<heading id="h1" level="1" implicit="yes" format="display">ABSTRACT</heading>The Sarbanes-Oxley Act (SOX) mandates management evaluation and independent audits of internal control effectiveness. The mandate is costly to firms but may yield benefits through lower information risk that translates into lower cost of equity. We use unaudited pre-SOX 404 disclosures...