Abstract

http://ssrn.com/abstract=964865
 
 

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Was the Sarbanes-Oxley Act Good News for Corporate Bondholders?


Mark L. DeFond


University of Southern California - Leventhal School of Accounting

Mingyi Hung


The Hong Kong University of Science and Technology & University of Southern California

Emre Karaoglu


Columbia University - Columbia Business School

Jieying Zhang


University of Southern California - Leventhal School of Accounting

March 20, 2008


Abstract:     
We find a significant decline in average corporate bondholder value around events leading up to the passage of the Sarbanes-Oxley Act (SOX), but only among bonds issued by firms that are expected to experience relatively large governance changes under SOX. Further, we do not find evidence that the market expects bondholders to benefit from some of the positive consequences potentially associated with SOX, such as improved earnings quality, a reduced probability of intentional misreporting, or reduced earnings volatility. Together, these findings are consistent with the bond market expecting the exogenously-imposed changes under SOX to result in corporate governance structures that make bondholders relatively worse off.

Number of Pages in PDF File: 64

JEL Classification: G38, G12, G32, K22

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Date posted: February 25, 2007 ; Last revised: July 13, 2008

Suggested Citation

DeFond, Mark L. and Hung, Mingyi and Karaoglu, Emre and Zhang, Jieying, Was the Sarbanes-Oxley Act Good News for Corporate Bondholders? (March 20, 2008). Available at SSRN: http://ssrn.com/abstract=964865 or http://dx.doi.org/10.2139/ssrn.964865

Contact Information

Mark DeFond
University of Southern California - Leventhal School of Accounting ( email )
Accounting Building, Room 206
Los Angeles, CA 90089-0441
United States
213-740-5016 (Phone)
213-747-2815 (Fax)
Mingyi Hung (Contact Author)
The Hong Kong University of Science and Technology & University of Southern California ( email )
Hong Kong
Nuri Karaoglu
Columbia University - Columbia Business School ( email )
3022 Broadway
New York, NY 10027
United States
Jieying Zhang
University of Southern California - Leventhal School of Accounting ( email )
701 Exposition Blvd
Los Angeles, CA 90089
United States
213-740-8705 (Phone)
213-747-2815 (Fax)
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