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

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

    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.

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    File URL: http://www.sciencedirect.com/science/article/B6VGV-4V1KMPK-1/2/73fba206fa80b3bc5a45358209229679
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    Article provided by Elsevier in its journal Journal of Multinational Financial Management.

    Volume (Year): 19 (2009)
    Issue (Month): 3 (July)
    Pages: 193-205

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    Handle: RePEc:eee:mulfin:v:19:y:2009:i:3:p:193-205
    Contact details of provider: Web page: http://www.elsevier.com/locate/mulfin

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