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Sarbanes-Oxley and its Aftermath: A Review of the Evidence

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  • Boyle, Glenn
  • Grace-Webb, Eli

Abstract

Introduced in response to several high profile US corporate collapses the Sarbanes-Oxley Act (SOX) of 2002 has proven to be a gold mine for academic researchers: after only five years no less than 528 studies of SOX appear on the Social Sciences Research Network (www.ssrn.com). This essay seeks to review the results of this research and provide a concise summary of the available evidence as of late 2007. Overall although SOX appears to have had some beneficial effects it has also: increased the costs of auditing governance and human capital and compliance more generally; induced a mis-match between auditors and firms; encouraged firms to delist or otherwise stay below the regulatory radar; lowered corporate investment and risk-taking; and had ambiguous effects on the quality of investor information and capital market eeffciency.

Suggested Citation

  • Boyle, Glenn & Grace-Webb, Eli, 2007. "Sarbanes-Oxley and its Aftermath: A Review of the Evidence," Working Paper Series 19076, Victoria University of Wellington, The New Zealand Institute for the Study of Competition and Regulation.
    • Handle: RePEc:vuw:vuwcsr:19076
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    File URL: https://ir.wgtn.ac.nz/handle/123456789/19076
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    References listed on IDEAS

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    1. repec:reg:rpubli:175 is not listed on IDEAS
    2. Gordon, Lawrence A. & Loeb, Martin P. & Lucyshyn, William & Sohail, Tashfeen, 2006. "The impact of the Sarbanes-Oxley Act on the corporate disclosures of information security activities," Journal of Accounting and Public Policy, Elsevier, vol. 25(5), pages 503-530.
    3. Lobo, Gerald J. & Zhou, Jian, 2005. "To swear early or not to swear early? An empirical investigation of factors affecting CEOs' decisions," Journal of Accounting and Public Policy, Elsevier, vol. 24(2), pages 153-160.
    4. John C. Coates IV, 2007. "The Goals and Promise of the Sarbanes-Oxley Act," Journal of Economic Perspectives, American Economic Association, vol. 21(1), pages 91-116, Winter.
    5. Vidhi Chhaochharia & Yaniv Grinstein, 2007. "Corporate Governance and Firm Value: The Impact of the 2002 Governance Rules," Journal of Finance, American Finance Association, vol. 62(4), pages 1789-1825, August.
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    Keywords

    Sarbanes-Oxley Act (SOX);

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