The Sarbanes-Oxley Act of 2002 and Accounting Conservatism

32 Pages Posted: 3 Jun 2004

See all articles by Zabihollah Rezaee

Zabihollah Rezaee

University of Memphis - School of Accountancy

Pankaj K. Jain

University of Memphis - Fogelman College of Business and Economics

Date Written: June 2004

Abstract

We examine the impact of the Sarbanes-Oxley Act (the Act) on financial reporting conservatism. We analyze market-value-based, accrual-based, and earnings/returns relation measures of conservatism in the pre-Act period and post-Act period. Our results indicate that the impact of the Act on measures of financial reporting conservatism is insignificant. Results do not support the claim that the Act induced more conservative financial reporting as determined by our three measures of accounting conservatism.

Keywords: The Sarbanes-Oxley Act, Accounting Conservatism, Financial Reports, Corporate Governance, Audit Functions

JEL Classification: G34, G38, G12, M41, M44

Suggested Citation

Rezaee, Zabihollah and Jain, Pankaj K., The Sarbanes-Oxley Act of 2002 and Accounting Conservatism (June 2004). Available at SSRN: https://ssrn.com/abstract=554643 or http://dx.doi.org/10.2139/ssrn.554643

Zabihollah Rezaee (Contact Author)

University of Memphis - School of Accountancy ( email )

Fogelman College of Business and Economics
Memphis, TN 38152-6460
United States
901-678-4652 (Phone)

Pankaj K. Jain

University of Memphis - Fogelman College of Business and Economics ( email )

Memphis, TN 38152
United States

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