[ GOUVERNANCE D’ENTREPRISE ET COÛT DE LA DETTE : L’IMPACT DE LA LOI SARBANES OXLEY ]
Volume 24, Issue 4, November 2018, Pages 1731–1749
Sondes DRAIEF1
1 Institut Supérieur de Comptabilité et d’Administration des Entreprises, Université de la Manouba, Tunisia
Original language: French
Copyright © 2018 ISSR Journals. This is an open access article distributed under the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
This study examines the impact of the Sarbanes-Oxley Act on the relation between corporate governance mechanisms and cost of debt for a sample of American firms. Our results show that the cost of debt is positively related to board size in the pre-SOX period. However, creditors become insensitive to board size, after SOX. We also find that the negative effect of board independence and institutional ownership on the cost of debt is more strongly in the post-SOX period relative to the pre-SOX period. This evidence demonstrates that the quality of control of these actors is improved following SOX. The positive effect of managerial ownership and duality on the cost of debt weakens after SOX highlighting a reduction of managerial power after 2002. Moreover, audit committee characteristics (size, meeting, independence and expertise) became after SOX effective mechanisms, for creditors, that enhance the quality of financial information and negatively affect the cost of debt. Finally, the results don’t show a significant relationship between the nomination and compensation committee exempt of CEO and cost of debt over the two periods of the study.
Author Keywords: Cost of debt, board characteristics, audit committee, ownership structure, SOX.
Volume 24, Issue 4, November 2018, Pages 1731–1749
Sondes DRAIEF1
1 Institut Supérieur de Comptabilité et d’Administration des Entreprises, Université de la Manouba, Tunisia
Original language: French
Copyright © 2018 ISSR Journals. This is an open access article distributed under the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
Abstract
This study examines the impact of the Sarbanes-Oxley Act on the relation between corporate governance mechanisms and cost of debt for a sample of American firms. Our results show that the cost of debt is positively related to board size in the pre-SOX period. However, creditors become insensitive to board size, after SOX. We also find that the negative effect of board independence and institutional ownership on the cost of debt is more strongly in the post-SOX period relative to the pre-SOX period. This evidence demonstrates that the quality of control of these actors is improved following SOX. The positive effect of managerial ownership and duality on the cost of debt weakens after SOX highlighting a reduction of managerial power after 2002. Moreover, audit committee characteristics (size, meeting, independence and expertise) became after SOX effective mechanisms, for creditors, that enhance the quality of financial information and negatively affect the cost of debt. Finally, the results don’t show a significant relationship between the nomination and compensation committee exempt of CEO and cost of debt over the two periods of the study.
Author Keywords: Cost of debt, board characteristics, audit committee, ownership structure, SOX.
Abstract: (french)
Cette étude examine l’impact de la loi Sarbanes-Oxley sur la relation entre les mécanismes de gouvernance et le coût de la dette sur un échantillon de firmes américaines. Nos résultats montrent que la taille du conseil d’administration affecte positivement le coût de la dette, avant SOX. En revanche, les créanciers deviennent insensibles à la taille du conseil après SOX. Nous trouvons aussi que l’effet négatif de l’indépendance du conseil d’administration et de la propriété des investisseurs institutionnels sur le coût de la dette se renforce durant la période post –SOX par rapport à la période pré-SOX indiquant une amélioration de la qualité du contrôle de ces acteurs après la mise en place de cette loi. Par ailleurs, l’effet positif de la propriété managériale et de la dualité sur le coût de la dette s’affaiblit après SOX mettant en exergue une atténuation du pouvoir managérial après 2002. Les caractéristiques du comité d’audit (taille, fréquence des réunions indépendance et expertise) constituent, après SOX, des leviers d’action efficaces, pour les créanciers, qui améliorent la qualité de l’information financière et affectent négativement le coût de la dette. Enfin, les créanciers considèrent que les comités de nomination et de rémunération indépendants sont des attributs de gouvernance actionnariale et n’ont aucun effet sur le coût de la dette sur les deux périodes de l’étude.
Author Keywords: Coût de la dette, caractéristiques du conseil d’administration, comité d’audit, structure de propriété, SOX.
How to Cite this Article
Sondes DRAIEF, “CORPORATE GOVERNANCE AND COST OF DEBT : THE IMPACT OF THE SARBANES OXLEY ACT,” International Journal of Innovation and Applied Studies, vol. 24, no. 4, pp. 1731–1749, November 2018.
