Do Variations in the Strength of Corporate Governance Still Matter? A Comparison of the Pre- and Post-Regulation Environment
Corporate scandals brought the issue of corporate governance to the forefront of the agendas of lawmakers and regulators in the early 2000s. As a result, Congress, the New York Stock Exchange, and the NASDAQ enacted standards to improve the quality of corporate governance, thereby enhancing the quan...
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| Veröffentlicht in: | Journal of business ethics 2014-07, Vol.122 (3), p.361-373 |
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| creator | Harp, Nancy Myring, Mark Shortridge, Rebecca Toppe |
| description | Corporate scandals brought the issue of corporate governance to the forefront of the agendas of lawmakers and regulators in the early 2000s. As a result, Congress, the New York Stock Exchange, and the NASDAQ enacted standards to improve the quality of corporate governance, thereby enhancing the quantity and quality of disclosures by listed companies. We investigate the relationship between corporate governance strength and the quality of disclosures in pre-and post-regulation time periods. If cross-sectional differences in corporate governance policies affect the quality of financial disclosures, the quality of information available to analysts varies with such policies. Specifically, higher quality disclosures, produced as a result of strong corporate governance, should lead to more accurate and less dispersed analysts' forecasts. Our analysis suggests that voluntary implementation of stronger corporate governance enhanced the quality of disclosures in the pre-regulation period; however, exceeding current corporate governance standards does not appear to result in higher quality disclosures post-regulation. These results suggest that SOX and the stronger regulations enacted by U.S. exchanges were effective in reducing variation in the quality of financial information available to investors. |
| doi_str_mv | 10.1007/s10551-013-1749-4 |
| format | Article |
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If cross-sectional differences in corporate governance policies affect the quality of financial disclosures, the quality of information available to analysts varies with such policies. Specifically, higher quality disclosures, produced as a result of strong corporate governance, should lead to more accurate and less dispersed analysts' forecasts. Our analysis suggests that voluntary implementation of stronger corporate governance enhanced the quality of disclosures in the pre-regulation period; however, exceeding current corporate governance standards does not appear to result in higher quality disclosures post-regulation. 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If cross-sectional differences in corporate governance policies affect the quality of financial disclosures, the quality of information available to analysts varies with such policies. Specifically, higher quality disclosures, produced as a result of strong corporate governance, should lead to more accurate and less dispersed analysts' forecasts. Our analysis suggests that voluntary implementation of stronger corporate governance enhanced the quality of disclosures in the pre-regulation period; however, exceeding current corporate governance standards does not appear to result in higher quality disclosures post-regulation. These results suggest that SOX and the stronger regulations enacted by U.S. exchanges were effective in reducing variation in the quality of financial information available to investors.</abstract><cop>Dordrecht</cop><pub>Springer</pub><doi>10.1007/s10551-013-1749-4</doi><tpages>13</tpages></addata></record> |
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| ispartof | Journal of business ethics, 2014-07, Vol.122 (3), p.361-373 |
| issn | 0167-4544 1573-0697 |
| language | eng |
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| source | PAIS Index; Business Source Complete; JSTOR Archive Collection A-Z Listing; EBSCOhost Education Source; SpringerLink Journals - AutoHoldings |
| subjects | Accuracy Analytical forecasting Audit committees Business and Management Business Ethics Business structures Corporate governance Creative accounting Disclosure Earnings forecasting Economic analysis Economic policy Education Ethics Financial disclosure Financial reporting Forecasting standards Investments Investors Legislative process Management New York stock exchange Philosophy Public Company Accounting Reform & Investor Protection Act 2002-US Quality of Life Research Regulation Scandals Securities and Exchange Commission regulation Stock exchanges Studies U.S.A |
| title | Do Variations in the Strength of Corporate Governance Still Matter? A Comparison of the Pre- and Post-Regulation Environment |
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