Going-Private Decisions and the Sarbanes-Oxley Act of 2002: A Cross-Country Analysis

Kamar, Ehud; Karaca‐Mandic, Pinar; Talley, Eric L.

doi:10.1093/jleo/ewn019

“…They report a median market value for firms going private post-SOX of $23 million, less than half than that of firms going private pre-SOX, and less than one seventh that of their overall CRSP/Compustat sample. Kamar, Karaca-Mandic, and Talley (2009) confirm these findings in a difference-in-difference design, comparing going private deals by US firms with those by foreign firms before and after SOX. They find no increase for US firms overall, but do find more going private deals by US firms with market capitalizations under $30 million.…”

Section: Sox-like Laws In Other Countriessupporting

confidence: 71%

SOX after Ten Years: A Multidisciplinary Review

Coates

¹

,

Srinivasan²

2013

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We review and assess research findings from 120+ papers in accounting, finance, and law to evaluate the impact of the Sarbanes-Oxley Act. We describe significant developments in how the Act was implemented and find that despite severe criticism, the Act and institutions it created have survived almost intact since enactment. We report survey findings from informed parties that suggest that the Act has produced financial reporting benefits. While the direct costs of the Act were substantial and fell disproportionately on smaller companies, costs have fallen over time and in response to changes in its implementation. Research about indirect costs such as loss of risk taking in the U.S. is inconclusive. The evidence for and social welfare implications of claimed effects such as fewer IPOs or loss of foreign listings are unclear. Financial reporting quality appears to have gone up after SOX but research on causal attribution is weak. On balance, research on the Act's net social welfare remains inconclusive. We end by outlining challenges facing research in this area, and propose an agenda for better modeling costs and benefits of financial regulation.

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“…Better are difference-in-difference designs, such as those used by Kamar et al 2009 24 An open conceptual issue is whether to count the utility of a criminal in estimating social welfare effects of crime. Assume, for example, a fraudster obtains $1 from a victim and spends it on food.…”

Section: Estimating Causal Effects Of Financial Regulationmentioning

confidence: 99%

SOX after Ten Years: A Multidisciplinary Review

Coates

¹

,

Srinivasan

²

2014

Accounting Horizons

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We review and assess research findings from 120+ papers in accounting, finance, and law to evaluate the impact of the Sarbanes-Oxley Act. We describe significant developments in how the Act was implemented and find that despite severe criticism, the Act and institutions it created have survived almost intact since enactment. We report survey findings from informed parties that suggest that the Act has produced financial reporting benefits. While the direct costs of the Act were substantial and fell disproportionately on smaller companies, costs have fallen over time and in response to changes in its implementation. Research about indirect costs such as loss of risk taking in the U.S. is inconclusive. The evidence for and social welfare implications of claimed effects such as fewer IPOs or loss of foreign listings are unclear. Financial reporting quality appears to have gone up after SOX but research on causal attribution is weak. On balance, research on the Act's net social welfare remains inconclusive. We end by outlining challenges facing research in this area, and propose an agenda for better modeling costs and benefits of financial regulation.

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“…This additional regulatory burden has a fixed cost component that falls disproportionally onto the smaller quoted companies (Holmstrom and Kaplan (1993) and Engel et al (2007)). This rise in the costs of a stock listing and the likely inability to reap the benefits from a public listing appears to be the main reason for small US companies to go private starting with the late 1990s (Engel et al (2007), Carney (2006), Kamar, Karaca-Mandic, andTalley (2009), andMehran andPeristiani (2010)). …”

Section: Anglo-american Trends: Us and Ukmentioning

confidence: 99%

Leveraged Buyouts: A Survey of the Literature

Renneboog

¹

,

2017

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This paper provides an exhaustive literature review of the motives for public-to-private LBO transactions. First, the paper develops the theoretical framework for the potential sources of value creation from going private: a distinction is made between the reduction in agency costs, stakeholder wealth transfers, tax benefits, transaction costs savings, takeover defense strategies, and corporate undervaluation. The paper then reviews and summarizes whether and how these theories have been empirically verified in the four different strands of literature in LBO research. These strands of literature are categorized by phase in the LBO transaction: Intent (of a buyout), Impact (of the LBO on the various stakeholders), Process (of restructuring after the leveraged buyout) and Duration (of retaining the private status). Then, the paper shows that in the first half of the 2000s, a public-to-private LBO wave re-emerged in the US, UK and Continental Europe, whose value vastly exceeded that of the 1980s US LBO wave. Finally, the paper provides suggestions for further research.

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Going-Private Decisions and the Sarbanes-Oxley Act of 2002: A Cross-Country Analysis

Cited by 97 publications

References 42 publications

SOX after Ten Years: A Multidisciplinary Review

SOX after Ten Years: A Multidisciplinary Review

SOX after Ten Years: A Multidisciplinary Review

Leveraged Buyouts: A Survey of the Literature

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