Influence of disclosure and governance on risk of US financial services firms following Sarbanes-Oxley

Aigbe Akhigbe and Anna D. Martin

Journal of Banking & Finance, 2008, vol. 32, issue 10, 2124-2135

Abstract: This study finds significant changes in capital market measures of risk following the passage of Sarbanes-Oxley for US financial services firms. Shorter-term measures of risk shifts are positive, on average, and consistent with the mandatory nature of the disclosure and governance provisions. Longer-term total and unsystematic risk shifts are negative, on average, and consistent with reductions in investor uncertainty as transparency improved. We find that the changes in shorter-term and longer-term risk measures vary inversely with the strength of disclosure and governance characteristics. The financial market rewarded (punished) firms with stronger (weaker) disclosure and stronger (weaker) governance.

Keywords: Sarbanes-Oxley; Risk; effects; Financial; services; Disclosure; Governance (search for similar items in EconPapers)
Date: 2008
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Citations: View citations in EconPapers (38)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jbfina:v:32:y:2008:i:10:p:2124-2135

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