Stock Market Reactions to the Japanese Sarbanes-Oxley Act of 2006
University of Tokyo - Faculty of Engineering
University of Tokyo
September 27, 2009
Corporate Ownership & Control, Vol. 7, No. 2, pp. 126-136, Winter 2009
This article investigates stock market reactions to announcements related to the introduction of the Financial Instruments and Exchange Law or the so-called Japanese Sarbanes-Oxley Act (J-SOX), which was enacted to reinforce corporate accountability and responsibility after several corporate and accounting scandals in Japan. We find that the announcements leading to the passage of the J-SOX raised stock prices of firms listed on the First Section of the Tokyo Stock Exchange. Another finding is that firms with high ratio of foreign shareholders or leverage experienced more positive stock price reactions, perhaps because these firms were more prepared for J-SOX compliance, with a better governance structure. By contrast, whether the firm was audited by Big 4 audit firms did not seem to matter for investors. In addition, large firms tended to have more negative stock price reactions than small firms, perhaps due to the high costs of the J-SOX compliance.
Accepted Paper Series
Date posted: October 7, 2009 ; Last revised: December 26, 2009
© 2013 Social Science Electronic Publishing, Inc. All Rights Reserved.
This page was processed by apollo5 in 0.844 seconds