Propensity To Just Meet or Beat Quarterly Earnings Forecasts: An Examination of The Effects of Sox Sections 302 and 906

This paper examines whether the provisions of SOX Sections 302 and 906 are associated with improved quarterly financial reporting quality. SOX 302 and 906 require that senior managers certify the accuracy of their quarterly financial statements, and false certification now carries criminal penalties. Specifically, this paper examines whether companies are more or less likely to just meet or beat their quarterly earnings forecasts following the implementation of SOX 302 and 906. My results indicate that following Sox 302 and 906, companies are less likely to just meet or beat their quarterly earnings forecasts for quarters 2, 3, and 4, suggesting that SOX 302 and 906 are associated with improved financial reporting quality.