Factors defining the relationship between Sarbanes-Oxley compliance and corporate governance with respect to firm performance

Problem. Achieving Sarbanes-Oxley compliance offers a challenge to management as it attempts to implement proper strategies within the governance structure to maximize firm performance to meet benchmarks set by the board of directors and shareholders. This study was designed to investigate the factors that relate to the corporate governance strategic posture of a firm with respect to Sarbanes-Oxley compliance and overall firm performance.; Method. This study examined 200 publicly traded firms picked at random (100 Sarbanes-Oxley compliant and 100 noncompliant) to compare and uncover significant relationships between the strategic postures of each of the test groups. A strategic analysis of each firm's governance structure was conducted by measuring 19 corporate governance variables that were used to take a "snapshot" of each firm's governance posture and to investigate any relationships that existed between Sarbanes-Oxley compliant and noncompliant firms. The statistical tests implemented in this study included: t test, Chi-square test, and Pearson's Correlation.; Results. Analysis of the corporate governance posture of the firms in this study uncovered many statistically significant relationships. This study found that there was a significant difference in the governance postures of Sarbanes-Oxley compliant versus noncompliant firms. More specifically there were significant differences between compliant and noncompliant firms in relation to the level of Dominant Shareholders, CEO/Chairman Split, Board Size, Number of Directorships Held, Active and Former CEOs On Board, CEO Compensation, and Overall Firm Size. The results of this study show that there are strategic postures that foster superior levels of Sarhanes-Oxley compliance while maintaining higher levels of firm performance. A detailed analysis of these results can be found in Chapter 5.