%0 Journal Article
%J Research in Accounting Regulation
%D 2018
%T The Mitigation of High-Growth-Related Accounting Distortions after Sarbanes-Oxley
%A Moore,Jared
%A Graham,Roger
%K Accounting
%X Here we examine accruals and book-tax differences before and after the Sarbanes-Oxley Act of 2002 (SOX) in the context of high-growth vs. lower-growth firms. Our examination is based on the notion that high growth creates unique management and reporting challenges that can contribute to distortions related to accruals and book-tax differences. SOX, with its emphasis on financial reporting, control systems and management responsibility, would be relevant for firms with such challenges. Our results show a stronger reduction (weaker increase) in total accruals and book-tax differences (performance-matched modified Jones discretionary accruals) for high-growth firms from the pre- to the post-SOX period relative to lower-growth firms. We also find evidence that the relation between accounting returns and market returns strengthened for high-growth firms in the period after SOX, but not for lower-growth firms. We interpret these results as greater reductions in accounting distortions and related improvements in reporting quality for high-growth firms relative to other firms coinciding with the post-SOX period.
%B Research in Accounting Regulation
%C Amsterdam
%V 30
%8 2018
%G eng
%N 2
%2 a
%4 22336321537
%$ 22336321537