The spectacular corporate collapses over the past decade, along with the introduction of the Sarbanes-Oxley Act and similar legislations across the world, have promoted significant awareness of IT governance. However, the causes of success and failure in IT governance framework adoption are yet to be adequately studied. This study aims to address this deficiency by proposing a research model to...

We document that the period following the passage of the Sarbanes Oxley Act of 2002 (SOX) is associated with a significant reduction in compensation-based incentives to take risk, which is related to a decline in risky investments. Moreover, consistent with the rules in SOX directly affecting CEOs’ incentives to take risk, we document that the decline in risky investments exceeds the amount tha...

The Sarbanes-Oxley Act of 2002, which President Bush signed into law last year, represents an ambitious effort by Congress to address many data retention and preservation issues arising from the Enron and Arthur Andersen debacles. In addition to creating a new and apparently powerful Public Company Accounting Oversight Board (“Oversight Board”) and addressing corporate responsibility issues, th...

Using the passage of the Sarbanes-Oxley Act and the associated change in listing standards as a natural experiment, we find that while board independence decreases the cost of debt when credit conditions are strong or leverage low, it increases the cost of debt when credit conditions are poor or leverage high. We also document that independent directors set corporate policies that increase firm...

We study the effect of earnings manipulation on incentives within the corporate hierarchy. Division managers have to be compensated for not blowing the whistle when top managers manipulate earnings. We show that it is easier for division managers to prove top management’s manipulations when the performance of their own division is low. Earnings manipulation therefore undermines middle managers’...

ABSTRACT: End user applications (such as spreadsheets) have been cited as a previously ignored yet potentially significant risk to financial reporting in the wake of The Sarbanes-Oxley Act (PricewaterhouseCoopers [PwC] 2004; Ernst&Young [E&Y] 2004). We developed a realistic spreadsheet model in order to expose students to internal control issues inherent in a spreadsheet environment. By complet...