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In response to corporate scandals the USA issued the Sarbanes‐Oxley Act to promote corporate responsibility for financial reporting. Some see the impact of the US legislation crossing borders and influencing the nature of financial reporting in other countries. The purpose of this paper is to investigate whether or not there have been increases in transparency in non‐US financial markets, specifically in South East Asia, suggesting a ripple effect as a result of the Sarbanes‐Oxley Act.

The study examines the audited financial statements of 92 South East Asian companies issued before and after the Sarbanes‐Oxley legislation to note any significant increase in transparency. As a proxy for transparency, the study examines the number of footnotes included in audited financial statements.

The results indicate a statistically significant increase in the number of footnotes in the positive direction. Because of this increase, a changing trend of increased transparency is suggested in South East Asia.

In 2002 the USA passed the Sarbanes‐Oxley Act to promote corporate responsibility for financial reporting. Some see this US legislation creating a ripple effect on financial reporting in other countries. The findings of this study suggest a changing trend of increased transparency in financial reporting in South East Asia. Although this trend cannot be directly attributed to the effects of the Sarbanes‐Oxley Act, it appears to be related to a larger, more transcendent worldwide reform movement towards increased corporate responsibility and financial reporting to which the Sarbanes‐Oxley Act appears to have served as a catalyst.

We investigate how firms’ responses to misconduct change when the institutional environment becomes more stringent. Organizational theory offers conflicting perspectives on whether new legislation will increase or decrease pressure on firms to take remedial action following misconduct. The dominant perspective posits that new legislation increases expectations of firm behavior, amplifying pressure on them to take remedial action after misconduct. A more recent perspective, however, suggests that the mere necessity to meet more stringent regulatory requirements certifies firms as legitimate to relevant audiences. This certification effect buffers firms, reducing the pressure for them to take remedial action after misconduct. Using a temporary, largely arbitrary exemption from a key provision of the Sarbanes-Oxley Act, we show that firms that were not required to meet all the regulatory standards of good governance it required became 45% more likely to replace their CEOs following the announcement of an earnings restatement after Sarbanes-Oxley. On the other hand, those that were required to meet all of Sarbanes-Oxley’s provisions became 26% less likely to replace their CEOs following a restatement announcement. Ironically, CEOs at firms with a legislative mandate intended to increase accountability for corporate misconduct shoulder less blame than do CEOs at firms without such legislative demands.

Corporate scandals at Enron, Tyco, and MCI highlight the issue of opportunistic management behavior. The US Congress responded to these scandals by passing the Sarbanes‐Oxley Act of 2002 (SOX). SOX imposes additional management responsibilities and corporate operating costs on companies trading under SEC regulations. This paper examines three options for US corporations responding to SOX: compliance with SOX, taking a company private, or moving to a non‐ SEC‐regulated exchange, such as an international exchange. The paper then examines potential corporate governance options using Transaction Cost Economics (TCE; Williamson 1985) to develop propositions regarding which options firms may select.

As a result of scandals concerning major financial crime in the early twenty‐first century, including accounting and auditing fraud and inappropriate behavior by directors on the boards of US corporations, Congress hurriedly enacted the Sarbanes‐Oxley Act (SOX) in 2002. SOX's major purpose was to restore investor confidence in America's securities markets. Small firms argued that their cost of compliance was very heavy and that their burden was greater than for larger firms, especially the costs related to section 404 of the Act, which dealt with new requirements to obtain independent audit opinions. The authors found no empirical research that supports or denies these claims. Subsequently, in 2007, the Securities and Exchange Commission reduced the Act's new audit requirements for small companies. This paper aims to examine audit fees for large and small firms.

The study examines actual audit fee data to investigate the increased costs paid by publicly traded companies to independent audit firms for their services due to Sarbanes‐Oxley. The authors use univariate and multivariate statistical methods to compare increases in audit fees paid by samples of 150 large firms and 150 small firms.

The study finds that both small and large firms incurred increased audit fees due to compliance with Sarbanes‐Oxley, and that small companies did incur larger increases in their cost burden.

The study uses actual audit fee data reported to the Securities and Exchange Commission and controls for other factors that determine audit fees in reaching its conclusions.

The purpose of this article is to investigate whether economic value added (EVA^®) is a superior financial performance metric and creates market value added (MVA), as claimed by Stern Stewart and Company, and therefore is consistent with the purpose and intent of the UK Companies Act of 2006 and the Sarbanes‐Oxley Act of 2002. If these claims can be sustained, then it could be argued that this valuation metric should form part of the Business Review, Section 417 of the UK Companies Act of 2006, and furthermore it could be an appropriate approach to the attainment of the corporate objective of the UK Companies Act of 2006, Section 172(1).

A survey was undertaken of journal articles published in mainstream academic journals from 1997 to 2008 that investigated the claims of Stern Stewart and Company that EVA^® was a superior financial performance metric vis‐à‐vis other well‐established accounting and financial metrics. As the empirical evidence in support of these claims was not compelling, the epistemology and methodology of EVA^® were examined, and were found to be deficient.

There is insufficient supportive evidence to validate the claims of EVA^®; furthermore, from the perspective of epistemology and sound research methodology it is not possible to make a robust case for the unqualified use of EVA^® in jurisdictions where the UK Companies Act of 2006 and the Sarbanes‐Oxley Act of 2002 apply. Directors who make unqualified use of this financial performance metric place themselves at unnecessary risk.

There is no evidence from the scrutiny of publicly available secondary sources to indicate that the implications of the UK Companies Act of 2006 and the Sarbanes‐Oxley Act of 2002, for the use of the financial performance valuation metric, EVA^®, has been previously undertaken or published.

The purpose of this paper is to evaluate recent corporate failures and their effect on financial statements, as well as the measures being taken to rebuild trust in corporate America.

Looks at how corporate governance in the USA is undergoing comprehensive reforms, particularly the significant Sarbanes‐Oxley Act.

Measures to rebuild trust in corporate America are being implemented.

The paper is of value by showing how the Sarbanes‐Oxley Act is by far is the most important legislative act governing business in the beginning of the twenty‐first century.

The purpose of this study is to empirically analyze, with a greater degree of accuracy than is currently presented in the literature, the comprehensive risk impact of the Sarbanes Oxley Act of 2002. Research to date is based upon a series of simple mean‐variance analyses and is therefore unreliable.

Rigorous statistical methodology to include a highly representative dataset, difference‐in‐difference analysis, comprehensive controls, and fixed effects (firm as well as longitudinal). As a reliability check, the authors also employ several pre‐ and post‐tests.

In support of Bargeron et al., the authors find that the Sarbanes Oxley Act of 2002 significantly reduced firm risk. In particular, the law reduced firms' risk‐adjusted returns as well as “upside” risk. This is not a mere repeat of prior research, but a detailed analysis of the law's risk impact.

As a study of corporate risk, there are inherent limitations, as contained in every study of this type. First, the authors are unable to account for every single factor that might influence firm risk. However, their methodology represents a significant improvement over the current literature, and therefore produces more comprehensive, detailed, and reliable findings.

The main practical implication is that Sarbanes Oxley, the most important and comprehensive US financial regulation since the New Deal, reduced firm (equity) risk. This represents a finding of enormous importance: comprehensive accounting regulation was never intended to alter firm risk, yet this study strongly suggests that it has in two specific ways.

As a result of this study, the cost to investors – the “social” cost – of this important regulation can now be analyzed more conclusively. In particular, the authors suggest Sarbanes Oxley reduced “upside” risk as well as firms' risk‐adjusted returns. This is of enormous potential importance to investors of all types.

This study is original and hence important in several ways: the dataset is arguably an improvement – in terms of the degree to which it is representative of the US economy – over Bargeron et al., the most conclusive study of its type to date; the methods are a significant improvement over the current published studies in the literature; the risk measures analyzed are also entirely distinct and new from prior research in a manner that is important. Prior research, as based upon simple mean‐variance analyses, is unreliable.

This paper aims to examine the recent evolution of the regulation of statutory auditing since the passage of the Sarbanes-Oxley Act of 2002 in the USA by comparing the regulatory structures for auditing in the USA, France and Canada.

Using publicly available documents, the paper seeks to understand how the regulatory structures for statutory auditing have changed in the period since the passage of the Sarbanes-Oxley Act. The USA, France and Canada were chosen for analysis because prior to Sarbanes-Oxley the regulatory structures of these three countries were relatively distinct, whereas subsequent to the Act they appear to be becoming similar.

The authors interpret the increasing apparent similarity in the regulatory structures for statutory auditing in these three countries to be the result of external pressures from global capital markets for standardized regulatory practices. However, this apparent similarity may also be a form of “decoupling”, whereby actors in the institutional field of professional regulation, under pressures from powerful external forces, seek to enhance their legitimacy while maintaining internal flexibility and a certain capacity for resistance against external pressures in the institutional field.

The paper relies on a qualitative analysis of regulatory structures based on a review and analysis of publicly available documents and legislation. As such, it has limitations similar to other qualitative studies.

The regulation of statutory auditing is important to society both to assure the proper functioning of capital markets and to provide reliable information to the general public. Gaining a better understanding of the regulatory structures for statutory auditing advances the public interest.

There have been few prior research efforts that have examined the regulation of statutory auditing through the lens of new institutional theory.

The Sarbanes‐Oxley Act has celebrated its fifth anniversary. This paper aims to discuss the effectiveness and usefulness to the accounting profession and the investing community of the reforms set forth in the Act.

Various components of the Sarbanes‐Oxley Act of 2002 are explored in detail, predominantly those dealing with corporate governance and internal controls. Discussions with practicing certified public accountants along with opinions from other professionals in the investing community are used to gain insight into the Act's effects on those who work its provisions on a daily basis.

Differing opinions exist as to the effects of the reforms on the accounting profession, financial reporting, capital markets, and ultimately, investor confidence. Some experts feel the reforms are helping to restore investor confidence in issuer's financial statements while others feel the cost of compliance with the Act's reforms exceed the benefits.

Implementation of the Act's reforms are not without controversy. This paper highlights the need for investors to understand the nature and issues surrounding the reforms to help increase investor confidence in the financial markets.

This paper reviews the origins of the Act's reforms and their intended purpose. A better understanding of the reforms and discussions with experts in the business community allows investors to determine the effectiveness and usefulness of the Act.

The Sarbanes‐Oxley Act outlawed some of the worst practices of the failed companies, and imposed significant changes in accounting and auditing rules, as well as oversight of public accounting. This article contains a checklist that is intended to provide principal executive, financial and accounting officers with a catalog of and brief commentary on new or amended rules that may require changes in procedures or duties within their respective areas of responsibility. The checklist covers certification requirements, reports on disclosure and financial controls, financial reporting, requirements relating to audit committees, relations with the auditor, and management conduct.