More intense application of governance mechanisms such as mandated by Sarbanes-Oxley and Dodd-Frank may cause firms to take on fewer risky projects and thus increase potential shareholder wealth.

Question

Quizplus · Accepted Answer

Increased governance mechanisms often lead to more cautious decision-making, potentially reducing risk-taking and thus limiting opportunities for higher returns, which may not necessarily increase shareholder wealth.

More Intense Application of Governance Mechanisms Such as Mandated by Sarbanes-Oxley