An International Meeting of the American Accounting Association American Accounting Association 2006 Annual Meeting August 6–9, 2006 Washington, D.C.

Loretta Baryeh
Morgan State University

Jui - Chin Chang
Morgan State University

Huey - Lian Sun
Morgan State University

Abstract: We examine the relationship between information content of earnings and the disclosure of audit committee independence under the Sarbanes-Oxley Act (SOX) and the Security Exchange Commission (SEC) rules. Specifically, we are interested in the difference in information content of earnings between U.S. and non-U.S. firms due to the fact that non-U.S. firms were not required to comply the audit committee independence requirements while most U.S. firm already complied in 2002. We find evidence that the U.S. firms have higher information content of earnings than the non-U.S firm in the year of 2002. The information content of earnings is found to be positively related to the board and audit committee independence. For non-U.S. firms, we also find that early compliance of audit committee independence requirement is favorably recognized by the market. Our findings provide evidence that disclosures of

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