Suchergebnisse

Drawing upon the long established stream of agency theory literature, this research investigates the effect the impact of the Sarbanes-Oxley Act of 2002 (SOX) on the moderating effect of corporate governance mechanisms on the agency problem. Significant attention has been given to the costs associated with SOX, yet there is no notable research which examines the benefits derived therefrom. The purpose of this research is to fill the void in the current literature and complement its focus on costs with a serious investigation into whether benefits are being realized from this legislation. Investigating domestic, manufacturing firms listed on the New York Stock Exchange, this research illustrates that SOX caused these governance mechanisms to effectively moderate agency conflict in a post-SOX environment for this sample when they did not do so in a pre-SOX environment. Additionally, it concludes that in a model that includes audit fees, SOX improved the effectiveness of these governance mechanisms in the reduction of agency costs more predominantly with more robust results. Therefore, this research is the first to provide evidence that there are measureable benefits that flow from the passage of SOX.

Drawing upon the long established stream of agency theory literature, this research investigates the effect of corporate governance mechanisms on agency costs before the passage of the Sarbanes-Oxley Act of 2002, thus questioning the rationale and assumptions made in this legislation. Investigating domestic, manufacturing firms listed on the New York Stock Exchange, this research concludes that many governance controls long held to temper agency conflict did not do so in a pre-SOX environment. Therefore, it is incumbent upon researchers to determine what caused these mechanisms to fail before the passage of SOX. If researchers do not learn from the mistakes of the past and help business understand how they occurred, these mistakes will repeat themselves.

Purpose
In the 1990s and beginning of the next decade, a series of financial accounting scandals occurred in the United States (USA or US) and in several other countries of the world. The USA and Italy (among others) responded with legislation to reform financial reporting and corporate governance in these jurisdictions. This paper aims to compare the regulatory response of Italy to that of the USA.


Design/methodology/approach
This paper includes a review of relevant literature and evaluation of the actions of the regulatory authorities.


Findings
In the case of the financial reporting crises, the rapid response put the USA into the role of the "first mover" with the European Union (EU) reacting to US initiatives and eventually converging to a large degree with the provisions of the US legislation. Italy has adopted many of the same regulatory reforms as the USA and has added some reforms that are directed to the specific needs to Italy.


Research limitations/implications
In conjunction with legislative initiatives like Sarbanes-Oxley, private enforcement mechanisms, such as shareholder class action suits in the USA, play an important role in discouraging and punishing financial accounting fraud.


Practical implications
In the absence of significant reforms of the Italian private enforcement system, corporate governance abuses and the potential for accounting scandals may still be persistent. As a whole, cooperative efforts continue between the USA and the EU. Such efforts are needed more and more, as companies become increasingly globalized.


Originality/value
This paper provides comparison and evaluation of corporate governance reform efforts in the USA and Italy.