Abstract
This paper examines the market reaction of financial services firms to Sarbanes Oxley legislation. We test for the presence of financial services sector related abnormal returns in the event window surrounding Sarbanes Oxley legislation. In addition, we test for a shift in systematic risk in the period following the imminent passage of Sarbanes Oxley. We use event study methodology to determine if financial sector firms experience abnormal returns at various dates associated with the passage of the legislation. We find that some financial services sectors have significant positive abnormal returns and find that one financial services sector, brokerage firms, has negative abnormal returns at one point in the legislative process. We find a shift in systematic risk of life insurance companies but no systematic risk shift in any other financial services sector.
Recommended Citation
Marlett, David C.; Davis, Harry M.; and Kessler, Terrill R.
(2011)
"Market Reaction and Structural Risk Shifts of Financial Services Firms: The Sarbanes-Oxley Act of 2002,"
Journal of Business, Industry, and Economics: Vol. 16, Article 4.
Available at:
https://roar.una.edu/jobie/vol16/iss1/4