Abstract

http://ssrn.com/abstract=1106279
 
 

Citations



 


 



Why Do Firms Go Dark? Causes and Economic Consequences of Voluntary SEC Deregistrations


Christian Leuz


University of Chicago - Booth School of Business; National Bureau of Economic Research (NBER); European Corporate Governance Institute (ECGI); Center for Financial Studies (CFS); University of Pennsylvania - Wharton Financial Institutions Center; CESifo Research Network

Alexander J. Triantis


University of Maryland - Robert H. Smith School of Business

Tracy Yue Wang


University of Minnesota - Twin Cities - Carlson School of Management


Journal of Accounting & Economics (JAE), 2008

Abstract:     
We examine a comprehensive sample of going-dark deregistrations where companies cease SEC reporting, but continue to trade publicly. We document a spike in going dark that is largely attributable to the Sarbanes-Oxley Act. Firms experience large negative abnormal returns when going dark. We find that many firms go dark due to poor future prospects, distress and increased compliance costs after SOX. But we also find evidence suggesting that controlling insiders take their firms dark to protect private control benefits and decrease outside scrutiny, particularly when governance and investor protection are weak. Finally, we show that going dark and going private are distinct economic events.

Keywords: Going private, Disclosure, Sarbanes-Oxley Act, Deregistration, Private control benefits, Pink sheets, Liquidity, Stock market reactions

JEL Classification: G18, G38, K22, G39, M41, M45, M44, G14

Accepted Paper Series





Not Available For Download

Date posted: March 18, 2008  

Suggested Citation

Leuz, Christian and Triantis, Alexander J. and Wang, Tracy Yue, Why Do Firms Go Dark? Causes and Economic Consequences of Voluntary SEC Deregistrations. Journal of Accounting & Economics (JAE), 2008. Available at SSRN: http://ssrn.com/abstract=1106279

Contact Information

Christian Leuz (Contact Author)
University of Chicago - Booth School of Business ( email )
5807 S. Woodlawn Avenue
Chicago, IL 60637
United States
773-834-1996 (Phone)
HOME PAGE: http://chicagobooth.edu/fac/christian.leuz
National Bureau of Economic Research (NBER) ( email )
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
HOME PAGE: http://www.nber.org
European Corporate Governance Institute (ECGI)
Brussels
Belgium
HOME PAGE: http://www.ecgi.org
Center for Financial Studies (CFS) ( email )
Grüneburgplatz 1
Frankfurt am Main, 60323
Germany
University of Pennsylvania - Wharton Financial Institutions Center
3641 Locust Walk
Philadelphia, PA 19104-6218
United States
CESifo Research Network
Poschinger Str. 5
Munich, DE-81679
Germany
Alexander J. Triantis
University of Maryland - Robert H. Smith School of Business ( email )
Department of Finance
College Park, MD 20742-1815
United States
301-405-2246 (Phone)
301-314-9157 (Fax)
Tracy Yue Wang
University of Minnesota - Twin Cities - Carlson School of Management ( email )
19th Avenue South
Minneapolis, MN 55455
United States
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