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Sarbanes-Oxley contributed to more conservative financials?

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What are the distortions caused by differing accounting procedures in the profitability ratio, for example, using earnings before interest and taxes instead of net operating income?

How has Sarbanes-Oxley contributed to more conservative financial and business practices?

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Your tutorial is 247 words and explains how which version is used for "profits" impacts ratios and how SOX created a climate where firms are more conservative.

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What are the distortions caused by differing accounting procedures in the profitability ratio, for example, using earnings before interest and taxes instead of net operating income?

There are various "versions" of the classic ratios and they can make a large difference in the outcome of the analysis. For instance, return on assets can be computed using net income, net operating income after taxes, or operating income. Each other these can be very ...

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Carol Sargent, PhD
Education
  • BSc, University of Virginia
  • MSc, University of Virginia
  • PhD, Georgia State University
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