Journal of Accounting and Economics Vol. 44 No. 1-2 2007
Economic consequences of the Sarbanes–Oxley Act of 2002
Abstract
This paper investigates the economic consequences of the Sarbanes–Oxley Act (SOX) by examining market reactions to related legislative events. Using concurrent stock returns of non-U.S.-traded foreign firms to estimate normal U.S. returns, I find that U.S. firms experienced a statistically significant negative cumulative abnormal return around key SOX events. I then examine the cross-sectional variation of U.S. firms’ returns around these events. Regression results are consistent with the non-audit services and governance provisions imposing net costs. Additional tests show that deferring the compliance of Section 404, which mandates an internal control test, resulted in significant cost savings for non-accelerated filers.
- DOI
- 10.1016/j.jacceco.2007.02.002
- Volume
- 44
- Issue
- 1-2
- Pages
- 74-115
- Language
- en
- Sources
- bibtex:phds-export.bib openalex crossref