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This paper aims to examine the effect of the Sarbanes–Oxley Act (SOX), which was signed by President George W. Bush and came into effect on July 30, 2002, on firm productivity.

The authors use the total factor productivity (TFP) as our measure of firm productivity.

Analyzing annual firm-level data from the Compustat database for the period of 1991-2006, the authors find that firm productivity increases at a higher rate in the post-SOX period. The results indicate that, although firms incur significant costs in complying with the requirements of the SOX, they also benefit from these requirements as evidenced by the improved productivity over time post-SOX. There is also a shift in the output elasticities from capital toward labor. The SOX has a positive effect on the output elasticity of labor but a negative impact on that of capital.

The results have the following important implications. The SOX is a value-enhancing regulation in that it not only strengthens a firm’s corporate governance but also improves its productivity. However, compliance with the SOX can impose a long-term cost on firms: the decrease in the capital investment, leading to a decline in the output elasticity of capital. If this decline in the capital investment continues, it can have an adverse effect on firm productivity in the long term.

This paper extends the literature along the line of the actual operational effects of the SOX regulation by examining its effect on the productivity of firms.

The purpose of this paper is to examine the relationship between productivity, firm strategy and bankruptcy risk.

This paper uses data envelopment analysis to compute productivity of firms and uses archival data to empirically examine the relationship between productivity, firm strategy and bankruptcy risk.

The results indicate that productivity has a positive effect on reducing bankruptcy risk, and the results also indicate that pursuing either of the generic strategies successfully has a positive effect on reducing bankruptcy risk. The study also brings to light the mediating effect of productivity in the relationship between strategy and bankruptcy risk.

The effect of productivity and firm strategy on bankruptcy risk is of importance to external stakeholders such as lenders and investors to evaluate the bankruptcy risk of such a firm. Internal stakeholders (managers and management consultants) will find this study expedient by using productivity enhancements and effective strategy implementation to mitigate bankruptcy risk.

This is the first paper to highlight the link between productivity and bankruptcy risk, firm strategy and bankruptcy risk and the mediation effects of productivity on the link between a cost leadership strategy and bankruptcy risk.

The purpose of this paper is to investigate the impact of nursing quality on Taiwan nursing homes, and differences of efficiency among different management types of nursing homes.

This study employs data envelopment analysis (DEA) to investigate the efficiency of nursing homes with and without quality variable. The impacts of nursing quality on the efficiency of nursing homes were studied. Finally, Tobit regression is used to explore the factors influencing efficiency in nursing homes.

The analysis shows that nursing quality has significant impacts on operating efficiency of nursing homes. When quality variables are included, all efficiencies were significantly improved, except scale efficiency of government-expense nursing homes (GEH); return of scale status of GEH decrease substantially; the licensed nursing staff can always improve efficiency; higher occupancy rate increase efficiency; private-operated veteran homes performs better than government-operated homes.

Nursing quality has a significant effect on the efficiency measures. Thus, the nursing quality cannot be ignored in assessing the performance of nursing homes. Otherwise, it may result in biased results. The efficiencies of private-operated nursing homes are better than the government operation. Government-operated nursing homes should take private nursing homes as the benchmark.

The paper demonstrates the nursing quality is an important factor in the efficiency measure of nursing homes. It also shows that privatized operation has higher efficiency than the government operation.

This study aims to examine the effect of the separation of control and ownership on the efficiency performance of Taiwanese electronics firms.

The paper employs data envelopment analysis to estimate efficiency performance. Following Kuan et al., the paper measures the severity of a firm's agency problems using the difference between voting rights and cash flow rights, and the difference between seat control rights and cash flow rights. Using a panel dataset for the period from 2004 to 2010, the paper runs OLS regressions to find the relationship between efficiency performance and the separation of control and ownership.

The results show that both the divergence between voting rights and cash flow rights, and the divergence between seat control rights and cash flow rights are significantly and negatively related to efficiency performance. Using Tobit regression in the second stage also provides a consistent result.

Shareholders, especially the minority group, should think twice before investing in a firm with a high deviation of control and ownership.

This is the first paper to examine the effect of the separation of control and ownership on the efficiency performance of Taiwanese electronics firms. The empirical evidence suggests existence of negative entrenchment effects in the electronics industry in Taiwan.

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.

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).

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.

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.

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.

The purpose of this paper is to examine whether audit committee members of the board prove to be better monitors if they are also on the compensation committee, as they would be more attuned to compensation related earnings management incentives.

The paper uses archival data on a sample of nonfinancial S&P 500 firms representing 1,032 firm years over the period 2003‐2005, and discretionary accruals as a proxy for financial reporting quality.

Firms with overlapping audit and compensation committees have higher financial reporting quality than those without such overlap. In addition, there is an inverted U‐shaped relationship between overlapping magnitude and financial reporting quality, suggesting that there are costs as well as benefits to overlapping committees.

The findings on this paper have implications for recent policy deliberations on the composition of board committees in general and audit committees in particular, as they clarify the benefits of overlapping committee members.

Understanding the costs and benefits of the board committee structure is particularly important as boards typically operate through the use of committees. This paper contributes to this area by considering the effect of overlapping memberships on two of the most active and important board committees – the compensation and audit committees – on the monitoring effectiveness of the audit committee.

The purpose of this paper is to examine the impact of merger and acquisition (M&As) of “second financial restructuring” (SFR) on the productivity growth of commercial banks in Taiwan.

The paper uses the Malmquist productivity change index to evaluate the changes from pre-SFR to SFR period and from pre-SFR to post-SFR period. In addition, the bootstrapping regression method is applied to examine the relationship of SFR policy and productivity change.

Merged banks have improved their productivity and scale efficiency after the M&As program of SFR. In addition, the greater productivity growth of merged banks than non-merged banks is attributed to small-sized and private-voluntary merged banks. Furthermore, the small-sized merged banks have greater productivity growth and scale efficiency improvement than the big-sized merged banks, and the government-mandatory merged banks have lower productivity growth than private-voluntary merged banks after the SFR.

This study has an academic implication for providing additional empirical evidence related to the impact of government M&As policy on bank productivity growth in the developing countries.

The findings on this paper have implications for financial reform policy and banking management on M&As activity, in particular, as they clarify the differential effects of big-sized vs small-sized and government-mandatory vs private-voluntary merged banks.

Understanding the impacts of financial reform is particularly important as the banking industry has become increasingly competitive. This paper contributes to this area by assessing the impact of the M&As policy of SFR on productivity growth and evaluating differential effects of M&As.

To better detect potential audit issues, since 2010, the Internal Revenue Service has required firms to file a separate schedule individually disclosing each of their uncertain tax positions (UTPs). This study uses an experiment to examine how this increase in detection risk from the newly created IRS schedule influences both a firm’s tax reporting and financial reporting concurrently. We find that corporate tax professionals were more likely to recommend an UTP when their firm had a strong UTP reporting quality, regardless of the detection risk level of the reporting environment. However, we find an interaction effect for the recording of the tax reserve. In a low detection risk environment, corporate tax professionals recorded a higher (lower) tax reserve when their firm had a weak (strong) UTP reporting quality. However, in a high detection risk environment, corporate tax professionals recorded a lower (higher) tax reserve when their firm had a weak (strong) UTP reporting quality. Overall, the results provide insight into the dual nature of UTP reporting and the determinants that influence each reporting behavior.