Market reactions to appointment of audit committee directors post-SOX: A note

In recent years, legislators and regulators have evinced significant interest in issues related to audit committee composition. Prior research finds that, in the pre-SOX period, the stock market reacts favorably to the appointment of expert directors to the audit committee. In the post-SOX period, almost all companies have financial experts on audit committees; hence, the signaling value of appointing an expert may be less valuable in the post-SOX period. Using a sample of 452 audit committee director appointments in 2004, 2006 and 2008, we find that the market reaction to the appointment of different types of expert directors is not significantly different from zero.