We look at the effect of the US Sarbanes-Oxley (SOX) financial regulation on industrial innovation. Our theoretical framework shows it creating immediate uncertainty about its costs and future resolution of cost and managerial performance uncertainty. Real option value is created for investment...

This paper assesses how financial regulation, in the form of the Sarbanes-Oxley Act (SOX), affects industrial innovation. We describe the decision faced by an investor considering an innovative project before, at the time of, and subsequent to SOX. SOX is shown to create a real option value for...

This paper assesses how financial regulation, in the form of the Sarbanes-Oxley Act (SOX), affects industrial innovation. We describe the decision faced by an investor considering an innovative project before, at the time of, and subsequent to SOX. SOX is shown to create a real option value for...