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The role of corporate governance during the pre- and post-Sarbanes Oxley periods

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  • Anthony C. Ng
  • Yaw M. Mensah

Abstract

This study examines the joint effects of the passing of Sarbanes-Oxley Act (SOX) of 2002 and firm-specific corporate governance mechanisms on the value-relevance of earnings. We find that value-relevance of earnings is significantly different for different sub-periods. We find that good corporate governance (proxied by lack of anti-takeover provisions) has a positive impact on the value-relevance of earnings only during the scandal (SCA) period. These results hold after controlling for changes in institutional ownership and earnings quality (EQ). Our results suggest that there is a substitution effect between good firm-specific corporate governance mechanisms and the strictness of the regulatory environment.

Suggested Citation

  • Anthony C. Ng & Yaw M. Mensah, 2010. "The role of corporate governance during the pre- and post-Sarbanes Oxley periods," International Journal of Corporate Governance, Inderscience Enterprises Ltd, vol. 2(1), pages 58-86.
    • Handle: RePEc:ids:ijcgov:v:2:y:2010:i:1:p:58-86
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