Changes in corporate governance: Externally dictated vs voluntarily determined

Using the 2003 SEC regulations (following Sarbanes–Oxley Act) on board independence as an identification for externally imposed governance changes, I compare its influence firm performance to effect of voluntarily conducted adjustments. use publicly listed US firms between 1998 and 2009. In a triple-difference (dif-in-dif-in-dif) analysis setting, explicitly interact dictated change in with identifiers shock non-compliant firms. Controlling companies voluntary forced modify their by increasing experience decrease ROA, asset turnover, sales growth. Testing joint adjustments through cross-sectional logistic-regression model, controlling further potential endogeneity instrumental variable (IV) regression obtain consistent results. The findings are robust other mandated provisions stronger bigger changes; small, single-segment operating wholesale, retail, high-tech industries; constrained financial distress, high leverage, low cash, volatility, growth R&D expenses.