Product Market Competition and Internal Governance: Evidence from the Sarbanes-Oxley Act

• 成果类型: Article
• 署名作者: Chhaochharia, Vidhi; Grinstein, Yaniv; Grullon, Gustavo; Michaely, Roni
• 署名单位: University of Miami; Reichman University; Cornell University; Rice University; Cornell University
• 刊物名称: MANAGEMENT SCIENCE
• ISSN/ISSBN: 0025-1909
• DOI: 10.1287/mnsc.2015.2409
• 发表日期: 2017
• 页码: 1405-1424
• 关键词: CORPORATE GOVERNANCE; Product market competition; Sarbanes-Oxley Act of 2002

摘要

We use the Sarbanes-Oxley Act of 2002 (SOX) as a quasi-natural experiment to examine the link between product market competition and internal governance mechanisms. Consistent with the notion that competition plays an important role in aligning incentives within the firm, SOX has led to a larger improvement in the operation of firms in concentrated industries than in nonconcentrated industries. Furthermore, within concentrated industries, the effect is especially pronounced among firms with weaker governance mechanisms prior to SOX. We corroborate these findings using two additional regulatory changes in the United States and abroad. Overall, our results indicate that corporate governance is more important when firms face less product market competition.