We define higher audit quality as greater assurance of high financial reporting quality. Researchers use many proxies for audit quality, with little guidance on choosing among them. We provide a framework for systematically evaluating their unique strengths and weaknesses. Because it is...

We find a significant decline in average corporate bondholder value around events leading up to the passage of the Sarbanes-Oxley Act (SOX), but only among bonds issued by firms that are expected to experience relatively large governance changes under SOX. Further, we do not find evidence that...