Abstract

http://ssrn.com/abstract=1109225
 
 

References (14)



 
 

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Product Market Competition and Agency Conflicts: Evidence from the Sarbanes Oxley Act


Vidhi Chhaochharia


University of Miami

Gustavo Grullon


Rice University - Jesse H. Jones Graduate School of Business

Yaniv Grinstein


Cornell University - Samuel Curtis Johnson Graduate School of Management

Roni Michaely


Cornell University - Samuel Curtis Johnson Graduate School of Management; Interdisciplinary Center (IDC)

July 2012


Abstract:     
We use the Sarbanes Oxley Act (SOX) as a natural experiment of a shock to internal governance to examine the link between product market competition and internal governance mechanisms. Consistent with the notion that product market competition is a close substitute for internal governance, we find that firms in concentrated industries experienced a larger improvement in operational efficiency after the approval of SOX than did firms in non-concentrated industries. These gains in efficiency appear to come from a significant reduction in production and administrative costs. Several robustness tests confirm that our main results are not driven by unobservable factors unrelated to changes in corporate governance.

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Date posted: March 19, 2008 ; Last revised: July 21, 2012

Suggested Citation

Chhaochharia, Vidhi and Grullon, Gustavo and Grinstein, Yaniv and Michaely, Roni, Product Market Competition and Agency Conflicts: Evidence from the Sarbanes Oxley Act (July 2012). Available at SSRN: http://ssrn.com/abstract=1109225 or http://dx.doi.org/10.2139/ssrn.1109225

Contact Information

Vidhi Chhaochharia
University of Miami ( email )
514 Jenkins Building
Miami, FL 33124
United States
Gustavo Grullon
Rice University - Jesse H. Jones Graduate School of Business ( email )
P.O. Box 2932
Houston, TX 77252-2932
United States
(713) 348-6138 (Phone)
(713) 348-6331 (Fax)
HOME PAGE: http://www.ruf.rice.edu/~grullon/
Yaniv Grinstein (Contact Author)
Cornell University - Samuel Curtis Johnson Graduate School of Management ( email )
Sage Hall
Ithaca, NY 14853
United States
607-255-8686 (Phone)
607-254-4590 (Fax)

Roni Michaely
Cornell University - Samuel Curtis Johnson Graduate School of Management ( email )
431 Sage Hall
Ithaca, NY 14853
United States
607-255-7209 (Phone)
607-254-4590 (Fax)
HOME PAGE: http://www.johnson.cornell.edu/faculty/profiles/Michaely/
Interdisciplinary Center (IDC)
P.O. Box 167
Herzliya, 46150
Israel
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