Separation of ownership and control in firms creates information asymmetry problems between shareholders and managers that expose shareholders to a variety of agency risks. This paper investigates the extent to which governance attributes that are intended to mitigate agency risk affect firms'...

This paper investigates the effect of internal control deficiencies and their remediation on accrual quality. We first document that firms reporting internal control deficiencies have lower quality accruals as measured by accrual noise and absolute abnormal accruals relative to firms not...

Using a framework for evaluating corporate governance recently developed by Standard amp; Poor's, this study investigates whether firms that exhibit strong governance benefit from higher credit ratings relative to firms with weaker governance. We document, after controlling for risk...

The Sarbanes-Oxley Act (SOX) mandates management evaluation and independent audits of internal control effectiveness. The mandate is costly to firms but may yield benefits through lower information risk that translates into lower cost of equity. We use unaudited pre-SOX 404 disclosures and SOX...