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Differential effect of the sarbanes-oxley act on individual and institutional investors

Title
Differential effect of the sarbanes-oxley act on individual and institutional investors
Authors
Park S.
Ewha Authors
박소라
SCOPUS Author ID
박소라scopus
Issue Date
2016
Journal Title
Journal of Applied Business Research
ISSN
0892-7626JCR Link
Citation
vol. 32, no. 2, pp. 517 - 526
Keywords
Individual investorsInstitutional investorsInvestor sophisticationThe sarbanes-oxley act of 2002
Publisher
CIBER Institute
Indexed
SCOPUS scopus
Abstract
This study investigates the differential effect of the Sarbanes-Oxley Act of 2002 (“SOX”) on unsophisticated individual investors and sophisticated institutional investors. I examine the relationship between abnormal stock returns around quarterly earnings announcements before and after SOX and investor sophistication. Empirical test results show that SOX positively affected stock returns reaction around the quarterly earnings announcement, consistent with prior literature. However, the increased stock returns reaction in the post-SOX period appears to be unrelated to individual investors. I find that the impact of SOX on institutional investor reaction to earnings announcement is statistically significant, whereas individual investor reaction to earnings announcement is not affected by SOX. This suggests that institutional investors have improved on the extent to which earnings information is efficiently priced after SOX, but not individual investors. These findings are important because the differential effect of the accounting disclosure regulation on investors has received little attention in the literature. © by author(s).
DOI
10.19030/jabr.v32i2.9593
Appears in Collections:
경영대학 > 경영학전공 > Journal papers
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