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

  • Akhigbe, Aigbe
  • Martin, Anna D.
Registered author(s):

    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.

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    File URL: http://www.sciencedirect.com/science/article/B6VCY-4RJYV60-3/2/5e25e39287c5ec9104e8f9b142f24405
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    Article provided by Elsevier in its journal Journal of Banking & Finance.

    Volume (Year): 32 (2008)
    Issue (Month): 10 (October)
    Pages: 2124-2135

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    Handle: RePEc:eee:jbfina:v:32:y:2008:i:10:p:2124-2135
    Contact details of provider: Web page: http://www.elsevier.com/locate/jbf

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