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Corporate Governance and Credit Access: The Sarbanes-Oxley Act as a Natural Experiment (Funchal B., Gottlieb D.)

Bank Lending Corporate Governance in Banking

Abstract This paper examines the effect of changes on corporate governance levels on the choice of firms’ debt financing, taking advantage of Sarbanes-Oxley Act as a natural experiment. Further our paper analyzes a specific benefit of SOX on terms of debt finance in a credit rationing environment. Our empirical methodology uses an experiment-like design in which we control for observed and unobserved firm heterogeneity via a differences-in-differences matching estimator. We evidence that firms subjected to this new regulation, that raised the governance requirements, observe a positive effect on their access to the credit market, increasing their debt level significantly, and reducing the cost of debt, evidencing an economic gains from SOX.
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Libref/ Funchal B., Gottlieb D. (2011) "Corporate Governance and Credit Access: The Sarbanes-Oxley Act as a Natural Experiment", available in http://EconPapers.repec.org/RePEc:anp:en2010:053
© Программирование — Александр Красильников, 2008
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