Sarbanes-Oxley and corporate risk-taking

Leonce L. Bargeron; Kenneth M. Lehn; Chad J. Zutter

doi:10.1016/j.jacceco.2009.05.001

Sarbanes-Oxley and corporate risk-taking

Leonce L. Bargeron
, Kenneth M. Lehn
, Chad J. Zutter

Finance and Quantitative Methods

Producción científica: Article › revisión exhaustiva

411 Citas (Scopus)

Resumen

We empirically examine whether risk-taking by publicly traded US companies declined significantly after adoption of the Sarbanes-Oxley Act of 2002 (SOX). Several provisions of SOX are likely to discourage risk-taking, including an expanded role for independent directors, an increase in director and officer liability, and rules related to internal controls. We find several measures of risk-taking decline significantly for US versus non-US firms after SOX. The magnitudes of the declines are related to several firm characteristics, including pre-SOX board structure, firm size, and R&D expenditures. The evidence is consistent with the proposition that SOX discourages risk-taking by public US companies.

Idioma original	English
Páginas (desde-hasta)	34-52
Número de páginas	19
Publicación	Journal of Accounting and Economics
Volumen	49
N.º	1-2
DOI	https://doi.org/10.1016/j.jacceco.2009.05.001
Estado	Published - feb 2010

Nota bibliográfica

Funding Information:
We thank Charles Calomiris, Allen Ferrell, Clive Lennox, Kate Litvak, Hal Scott, Peter Wallison, Jerold Zimmerman, Aiyesha Dey (the referee and discussant), the Editor, S.P. Kothari, and participants of the Journal of Accounting and Economics conference on Current Issues in Accounting and Reassessing the Regulation of Capital Markets for valuable comments. The authors gratefully acknowledge funding support from the National Research Institute of the American Enterprise Institute.

Financiación

We thank Charles Calomiris, Allen Ferrell, Clive Lennox, Kate Litvak, Hal Scott, Peter Wallison, Jerold Zimmerman, Aiyesha Dey (the referee and discussant), the Editor, S.P. Kothari, and participants of the Journal of Accounting and Economics conference on Current Issues in Accounting and Reassessing the Regulation of Capital Markets for valuable comments. The authors gratefully acknowledge funding support from the National Research Institute of the American Enterprise Institute.

Financiadores
National Research Institute of the American Enterprise Institute

ASJC Scopus subject areas

Accounting
Finance
Economics and Econometrics

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10.1016/j.jacceco.2009.05.001

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title = "Sarbanes-Oxley and corporate risk-taking",

abstract = "We empirically examine whether risk-taking by publicly traded US companies declined significantly after adoption of the Sarbanes-Oxley Act of 2002 (SOX). Several provisions of SOX are likely to discourage risk-taking, including an expanded role for independent directors, an increase in director and officer liability, and rules related to internal controls. We find several measures of risk-taking decline significantly for US versus non-US firms after SOX. The magnitudes of the declines are related to several firm characteristics, including pre-SOX board structure, firm size, and R\&D expenditures. The evidence is consistent with the proposition that SOX discourages risk-taking by public US companies.",

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AU - Zutter, Chad J.

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AB - We empirically examine whether risk-taking by publicly traded US companies declined significantly after adoption of the Sarbanes-Oxley Act of 2002 (SOX). Several provisions of SOX are likely to discourage risk-taking, including an expanded role for independent directors, an increase in director and officer liability, and rules related to internal controls. We find several measures of risk-taking decline significantly for US versus non-US firms after SOX. The magnitudes of the declines are related to several firm characteristics, including pre-SOX board structure, firm size, and R&D expenditures. The evidence is consistent with the proposition that SOX discourages risk-taking by public US companies.

KW - Corporate risk-taking

KW - Investment policy

KW - Legislative policy

KW - Sarbanes-Oxley

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Sarbanes-Oxley and corporate risk-taking

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Nota bibliográfica

Financiación

ASJC Scopus subject areas

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