Overall, this study provides early evidence that is consistent with Canadian
regulators’ initiatives that stronger corporate governance mechanisms may be
important factors in improving the integrity of financial reporting for Canadian firms.
Since Canadian regulators adopted a set of corporate governance rules which are
similar to some provisions of the Sarbanes-Oxley Act, the SEC and various stock
exchange listing standards around the world, the evidence in the paper suggests that
future policy initiatives in the USA and other countries should reinforce the need for
independent boards, effective management compensation and stronger shareholders’
rights, which is likely to result in better earnings quality.