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| Author: | Bargeron, L.L. Lehn, K.M. Zutter, C.J. |
| Title: | Sarbanes-Oxley and corporate risk-taking |
| Journal: | Journal of Accounting & Economics
2010 : FEB, VOL. 49:1-2, p. 34-52 |
| Index terms: | legislation policy risk investments accounting law USA |
| Language: | eng |
| Abstract: | This study empirically investigates whether risk-taking by publicly traded US companies declined significantly after adoption of the Sarbanes-Oxley Act of 2002 (hereafter as: SOX). Risk-taking is likely to be discouraged by several provisions of SOX, including an expanded role for independent directors, an increase in director and officer liability, and rules related to internal controls. Several measures of risk-taking are found decline significantly for US vs. non-US firms after SOX. The magnitudes of the declines are related to several firm characteristics, which include pre-SOX board structure, firm size, and R&D expenditures. The evidence is consistent with the idea of SOX discouraging risk-taking by public companies. |
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