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Article: The Sarbanes-Oxley act and corporate investment: A structural assessment

TitleThe Sarbanes-Oxley act and corporate investment: A structural assessment
Authors
KeywordsCorporate governance
Investment Euler equation
Investment-implied discount rate
Sarbanes-Oxley Act
Issue Date2010
PublisherElsevier BV. The Journal's web site is located at http://www.elsevier.com/locate/jfec
Citation
Journal Of Financial Economics, 2010, v. 96 n. 2, p. 291-305 How to Cite?
AbstractWe assess the impact of the Sarbanes-Oxley Act of 2002 on corporate investment in an investment Euler equation framework. We allow a dummy for the passage of the Act to affect the rate at which managers discount future investment payoffs. Using generalized method of moments estimators, we find that the rate U.S. firm managers apply to discount investment projects rises significantly after 2002, while the discount rate for U.K. firms remains unchanged. The effects of the legislation on corporate investment are asymmetric, and are much more significant among relatively small firms. We also find that well-governed firms, firms with a credit rating, and accelerated filers of Section 404 of the Act have become more cautious about investment. © 2010 Elsevier B.V.
Persistent Identifierhttp://hdl.handle.net/10722/129426
ISSN
2015 Impact Factor: 3.541
2015 SCImago Journal Rankings: 9.920
SSRN
ISI Accession Number ID
References

 

DC FieldValueLanguage
dc.contributor.authorKang, Qen_HK
dc.contributor.authorLiu, Qen_HK
dc.contributor.authorQi, Ren_HK
dc.date.accessioned2010-12-23T08:37:10Z-
dc.date.available2010-12-23T08:37:10Z-
dc.date.issued2010en_HK
dc.identifier.citationJournal Of Financial Economics, 2010, v. 96 n. 2, p. 291-305en_HK
dc.identifier.issn0304-405Xen_HK
dc.identifier.urihttp://hdl.handle.net/10722/129426-
dc.description.abstractWe assess the impact of the Sarbanes-Oxley Act of 2002 on corporate investment in an investment Euler equation framework. We allow a dummy for the passage of the Act to affect the rate at which managers discount future investment payoffs. Using generalized method of moments estimators, we find that the rate U.S. firm managers apply to discount investment projects rises significantly after 2002, while the discount rate for U.K. firms remains unchanged. The effects of the legislation on corporate investment are asymmetric, and are much more significant among relatively small firms. We also find that well-governed firms, firms with a credit rating, and accelerated filers of Section 404 of the Act have become more cautious about investment. © 2010 Elsevier B.V.en_HK
dc.languageengen_US
dc.publisherElsevier BV. The Journal's web site is located at http://www.elsevier.com/locate/jfecen_HK
dc.relation.ispartofJournal of Financial Economicsen_HK
dc.rightsCreative Commons: Attribution 3.0 Hong Kong License-
dc.subjectCorporate governanceen_HK
dc.subjectInvestment Euler equationen_HK
dc.subjectInvestment-implied discount rateen_HK
dc.subjectSarbanes-Oxley Acten_HK
dc.titleThe Sarbanes-Oxley act and corporate investment: A structural assessmenten_HK
dc.typeArticleen_HK
dc.identifier.emailLiu, Q: qliu@hku.hken_HK
dc.identifier.authorityLiu, Q=rp01078en_HK
dc.description.naturepostprint-
dc.identifier.doi10.1016/j.jfineco.2010.02.002en_HK
dc.identifier.scopuseid_2-s2.0-77951203892en_HK
dc.identifier.hkuros177110en_US
dc.relation.referenceshttp://www.scopus.com/mlt/select.url?eid=2-s2.0-77951203892&selection=ref&src=s&origin=recordpageen_HK
dc.identifier.volume96en_HK
dc.identifier.issue2en_HK
dc.identifier.spage291en_HK
dc.identifier.epage305en_HK
dc.identifier.isiWOS:000276918300007-
dc.publisher.placeNetherlandsen_HK
dc.identifier.ssrn967950-
dc.identifier.scopusauthoridKang, Q=24484765900en_HK
dc.identifier.scopusauthoridLiu, Q=55429572300en_HK
dc.identifier.scopusauthoridQi, R=23091949700en_HK
dc.identifier.citeulike6662377-

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