Publication Type
Journal Article
Version
acceptedVersion
Publication Date
3-2011
Abstract
The Sarbanes-Oxley Act (SOX) was passed in the wake of several scandals that rocked corporate America in 2001 and 2002. The objective behind SOX was to improve corporate governance by improving accounting disclosures. Compliance with Section 404 is considered by many to be the most costly requirement of SOX and has been argued to be a disproportionate burden for small firms. Consequently, firms with a public float below $75 million were granted several exemptions from compliance. We document an unintended effect of these exemptions: a weakening of corporate governance through a weakening of the market for corporate control.
Keywords
Compliance costs, Business structures, Premiums, Leverage, Cash, Corporate governance, Target acquisitions, Market capitalization, Acquisition costs, Securities and Exchange Commission regulation
Discipline
Finance | Finance and Financial Management
Research Areas
Finance
Publication
Journal of Institutional and Theoretical Economics
Volume
167
Issue
1
First Page
149
Last Page
164
ISSN
0932-4569
Identifier
10.1628/093245611794656435
Publisher
Mohr Siebeck
Citation
CHHAOCHHARIA, Vidhi; OTTO, Clemens A.; and VIG, Vikrant.
The unintended effects of the Sarbanes-Oxley Act. (2011). Journal of Institutional and Theoretical Economics. 167, (1), 149-164.
Available at: https://ink.library.smu.edu.sg/lkcsb_research/5374
Copyright Owner and License
Authors
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.
Additional URL
https://doi.org/10.1628/093245611794656435