Citation

Discussion Paper Details

Please find the details for DP6201 in an easy to copy and paste format below:

Full Details   |   Bibliographic Reference

Full Details

Title: A Lobbying Approach to Evaluating the Sarbanes-Oxley Act of 2002

Author(s): Yael Hochberg, Paola Sapienza and Annette Vissing-Jørgensen

Publication Date: March 2007

Keyword(s): Corporate Governance and Sarbanes Oxley Act

Programme Area(s): Financial Economics

Abstract: We evaluate the net benefits of the Sarbanes-Oxley Act (SOX) for shareholders by studying the lobbying behaviour of investors and corporate insiders to affect the final implemented rules under the Act. Investors lobbied overwhelmingly in favour of strict implementation of SOX, while corporate insiders and business groups lobbied against strict implementation. We identify the firms most affected by the law as those whose insiders lobbied against strict implementation, and compare their returns to the returns of less affected firms. Cumulative returns during the four and a half months leading up to passage of SOX were approximately 10 percent higher for corporations whose insiders lobbied against one or more of the SOX disclosure-related provisions than for similar non-lobbying firms. Analysis of returns in the post-passage implementation period indicates that investors? positive expectations with regards to the effects of the law were warranted for the enhanced disclosure provisions of SOX.

For full details and related downloads, please visit: https://cepr.org/active/publications/discussion_papers/dp.php?dpno=6201

Bibliographic Reference

Hochberg, Y, Sapienza, P and Vissing-Jørgensen, A. 2007. 'A Lobbying Approach to Evaluating the Sarbanes-Oxley Act of 2002'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=6201