Journal of Accounting and Economics Vol. 49 No. 1-2 2010
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.
- DOI
- 10.1016/j.jacceco.2009.05.001
- Volume
- 49
- Issue
- 1-2
- Pages
- 34-52
- Language
- en
- Sources
- bibtex:phds-export.bib openalex crossref