The Corporate Governance Code (Code) was established in Mexico in January 2000 to increase investor confidence by encouraging more accurate financial reporting and more transparent disclosure practices by management. Using a sample of Mexican firms, we investigate whether or not there is an improvement in earnings quality surrounding the implementation date of the Code. We use a variety of earnings quality characteristics frequently studied in prior international research. Our results indicate that the quality of earnings increases after the implementation of the Code. While earnings quality characteristics generally improve for firms listed exclusively on the Mexican Bolsa, we only document improvements in income smoothing and timely loss recognition for Mexican firms listed on U.S. stock exchanges. Our results suggest that the filing jurisdiction of Mexican firms influences the impact we observe in changes in quality of earnings surrounding the implementation of the Mexican Corporate Governance Code.

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