Changes in risk of foreign firms listed in the U.S. following Sarbanes-Oxley

Aigbe Akhigbe, Anna D. Martin and Takeshi Nishikawa

Journal of Multinational Financial Management, 2009, vol. 19, issue 3, 193-205

Abstract: This study investigates the changes in the riskiness of foreign firms listed in the U.S. following the passage of the Sarbanes-Oxley Act (SOX), legislation aimed at calming investor fears. While capital market measures of risk increase on average over a shorter-term period, total and unsystematic risk measures decrease on average over a longer-term period. Finding longer-term decreases in these risk measures is consistent with reductions in investor uncertainty. Further cross-sectional analyses show that foreign firms considered to be less uncertain at the time of SOX passage received the greatest risk reductions in the post-SOX period. Thus, it appears that the less uncertain foreign firms especially benefited from the heightened awareness and investor focus that occurred in conjunction with the passage of SOX.

Keywords: Sarbanes-Oxley; Risk; effects; Foreign; firms (search for similar items in EconPapers)
Date: 2009
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:mulfin:v:19:y:2009:i:3:p:193-205

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