Corporate governance and firm value: The impact of the 2002 governance rules

Vidhi Chhaochharia, Yaniv Grinstein

Research output: Contribution to journalArticle

267 Scopus citations

Abstract

The 2001 to 2002 corporate scandals led to the Sarbanes-Oxley Act and to various amendments to the U.S. stock exchanges' regulations. We find that the announcement of these rules has a significant effect on firm value. Firms that are less compliant with the provisions of the rules earn positive abnormal returns compared to firms that are more compliant. We also find variation in the response across firm size. Large firms that are less compliant earn positive abnormal returns but small firms that are less compliant earn negative abnormal returns, suggesting that some provisions are detrimental to small firms.

Original languageEnglish (US)
Pages (from-to)1789-1825
Number of pages37
JournalJournal of Finance
Volume62
Issue number4
DOIs
StatePublished - Aug 1 2007

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics

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