Contemporary Accounting Research Vol. 30 No. 3 2013
Did SOX Section 404 Make Firms Less Opaque? Evidence from Cross‐Listed Firms
Abstract
We study whether Section 404 of the Sarbanes-Oxley Act of 2002 made cross-listed firms less opaque via an examination of analyst earnings forecasts. To test this, we compare European Union (EU) firms that are cross-listed in the US—and therefore subject to S404—with comparable EU firms that are not cross listed. We find that while both types of firms experienced a decrease in opaqueness over time, this decrease was significantly larger for cross-listed firms. Our results are robust to accounting for concurrent sell-side analyst regulations in the US, delistings, and changes in corporate risk taking. Overall, our analysis suggests that SOX had a positive effect on corporate disclosure quality.
- DOI
- 10.1111/j.1911-3846.2012.01188.x
- Volume
- 30
- Issue
- 3
- Pages
- 1133-1165
- Language
- en
- Sources
- bibtex:phds-export.bib crossref openalex