Shine a Light: How Firm Responses to Announcing Earnings Restatements Changed After Sarbanes–Oxley

Pozner, Jo-Ellen, Cohen-Mohliver, Aharon and Moore, Celia (2022) Shine a Light: How Firm Responses to Announcing Earnings Restatements Changed After Sarbanes–Oxley. In: Business and the Ethical Implications of Technology. Springer, pp. 121-137. ISBN 978-3-031-18793-3

Abstract

We explore how the Sarbanes–Oxley Act of 2002 created pressure for firms to take more visible and costly corrective action following the announcement of an earnings restatement. Building on theory about focusing events, the institutional effects of legislative change, and the agenda-setting role of the media, we propose that Sarbanes–Oxley created reactive normative pressure on firms that announce earnings restatements, increasing the likelihood of CEO replacement in their aftermath. We theorize that Sarbanes–Oxley changed the meaning—and therefore the impact—of media coverage of earnings restatements. Our findings show that firm behavior after Sarbanes–Oxley did change in ways that are consistent with the intent of the legislation: to increase executives’ accountability for the reliability of their firms’ financial statements. Moreover, we show this change is a result both of the direct effect of the legislation on increasing CEO accountability as well as through intensifying the effect of the media spotlight on misconduct.

More Details

Item Type: Book Section
Subject Areas: Strategy and Entrepreneurship
Additional Information:

The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Switzerland AG 2022

Date Deposited: 16 Apr 2025 14:38
Last Modified: 23 Apr 2025 12:54
URI: https://lbsresearch.london.edu/id/eprint/4085
More

Export and Share


Download

Full text not available from this repository.

Statistics

Altmetrics
View details on Dimensions' website

Downloads from LBS Research Online

View details

Actions (login required)

Edit Item Edit Item