CEO's/ CFO's swearing by the numbers: does it impact the share prices of the firm?

Hsihui Chang*, Jengfang Chen, Woody M. Liao, Birendra K. Mishra

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

32 Citations (Scopus)


We examine the impact on share prices of firms whose CEOs and CFOs certify their financial statements under oath, pursuant to the administrative order issued by the SEC on June 27, 2002. We hypothesize that (1) the certification provides assurance to investors by making disclosure more credible and by reducing information asymmetry between owners and management, and (2) the assurance value of certification is reflected in the stock price of the certifying company. Overall, the empirical results are consistent with our hypotheses. We observe, on average, positive abnormal returns for firms whose CEOs/CFOs certified their financial statements by August 14, 2002. Based on an analysis of bid-ask spreads, certifying firms experienced a significant decline in information asymmetry after certification. In cross-sectional analyses, we find abnormal returns are positively associated with firms that were under investigation, that used Andersen as their auditor, and that practiced aggressive revenue recognition.
Original languageEnglish
Pages (from-to)1-27
Number of pages27
JournalAccounting Review
Issue number1
Publication statusPublished - 2006
Externally publishedYes


  • SEC
  • CEO
  • CFO
  • assurance
  • information asymmetry
  • certification
  • credible disclosure
  • share price


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