STOCK MARKET REACTIONS TO THE JAPANESE SARBANES-OXLEY ACT OF 2006

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Abstract

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. 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 a high ratio of foreign shareholders or leverage experienced more positive stock price reactions. By contrast, whether the firm was audited by Big 4 audit firms did not seem to matter to investors. In addition, large firms tended to have more negative stock price reactions than small firms.

Keywords: Sarbanes-Oxley Act, Corporate Governance, Internal Control, Financial Reporting, Event Study

How to cite this paper: Seino, K. & Takeda, F. (2009). Stock market reactions to the Japanese Sarbanes-Oxley act of 2006. Corporate Ownership & Control, 7(2), 126-136. https://doi.org/10.22495/cocv7i2p10