The Sarbanes-Oxley Act

The Sarbanes-Oxley Act

Introduction

This paper basically has made an attempt to explore the affect made by Sarbanes-Oxley Act which is named as SOX in the study over the quality of information the financial statements are equipped with. This paper has been formulated by taking a much longer post-SOX period. A real difference is between the firms which have implementation of technology and on the other hand the non-technological firms. The factors which are being used in the study in order to make the exploration more pronounced are the earnings management, conservatism and also the value relevance measures as a representator of the accounting quality.

Affect of SOX Act on Banking Industry

The government of United States has shown unprecedentedly fast kind of reaction with legislation which was aimed for the improvement of the accounting and auditing system in the states. This is what resulted SOX or Sarbanes-Oxley Act. This was not occurred in United States but also more of less in the same amount of time the European countries have reacted in the similar manner for making the financial governance and also the reporting en more effective.

The resulted of the research have shown ample evidences for proving that the enactment of SOX was something which put so many positive effects on the overall quality of accounting. This thing is much evident when talking about the earnings management and also the measures of the value relevance. A very important thing at this point is the overall lessening in the level of usage of the discretionary accruals, this is ones after SOX's enhancements and also it's actually finding. Besides all of this the value of the relevance about accounting information is also now more appreciated ones after the enactment of SOX act.

Auditing Around and Through the Computers

It has been seen that the assertion that managers will be managing earnings at the time when chances for detection and for correction by the auditors are much smaller. This particular situation is found in a more amount at times of the presence at technology firms this is due to the higher level of complexity. This can be used as an explanation at the time of high earnings management which are able to be found at firms which are more technologically efficient.

It has been said that the technological firms are much difficult for auditing this is due to the fact that they are able to manage ...