TY  - JOUR
AB  - Purpose– The purpose of this paper is to investigate the impact of the Sarbanes‐Oxley Act (SOX) on market‐based measures of earnings quality and cost of capital.Design/methodology/approach– The paper uses empirical data to determine measures for the market's perception of earnings quality and the ex‐ante cost of capital. The measures for 2001 (pre‐SOX) are compared to the measures for 2003 (post‐SOX).Findings– The results indicate that in the post‐SOX period, the market's perception of earnings quality has improved, while the firms' cost of equity capital has decreased.Research limitations/implications– At a time when debate is raging as to the overall impact of SOX on the US economy, this study provides some evidence as to its beneficial nature. A limitation is that the method of computing restricts the sample, potentially creating biases.Originality/value– This is the first study to investigate the impact of SOX on the market's perception of earnings quality and the firms' cost of equity capital.
VL  - 8
IS  - 3
SN  - 1475-7702
DO  - 10.1108/14757700910980831
UR  - https://doi.org/10.1108/14757700910980831
AU  - Chang Hsihui
AU  - Fernando Guy D.
AU  - Liao Woody
PY  - 2009
Y1  - 2009/01/01
TI  - Sarbanes‐Oxley Act, perceived earnings quality and cost of capital
T2  - Review of Accounting and Finance
PB  - Emerald Group Publishing Limited
SP  - 216
EP  - 231
Y2  - 2024/05/06
ER  -