Abstract

http://ssrn.com/abstract=1135443
 
 

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


Yael V. Hochberg


National Bureau of Economic Research (NBER)

Paola Sapienza


Northwestern University - Kellogg School of Management - Department of Finance; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR)

Annette Vissing-Jorgensen


Northwestern University - Kellogg School of Management; National Bureau of Economic Research (NBER)

March 2007

CEPR Discussion Paper No. DP6201

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.

Number of Pages in PDF File: 68

Keywords: Corporate Governance, Sarbanes Oxley Act

JEL Classification: G34, K22

working papers series





Date posted: May 22, 2008  

Suggested Citation

Hochberg, Yael V. and Sapienza, Paola and Vissing-Jorgensen, Annette, A Lobbying Approach to Evaluating the Sarbanes-Oxley Act of 2002 (March 2007). , Vol. , pp. -, 2007. Available at SSRN: http://ssrn.com/abstract=1135443

Contact Information

Yael V. Hochberg (Contact Author)
National Bureau of Economic Research (NBER) ( email )
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
Paola Sapienza
Northwestern University - Kellogg School of Management - Department of Finance ( email )
Evanston, IL 60208
United States
847-491-7436 (Phone)
847-491-5719 (Fax)
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
Centre for Economic Policy Research (CEPR)
77 Bastwick Street
London, EC1V 3PZ
United Kingdom
Annette Vissing-Jorgensen
Northwestern University - Kellogg School of Management ( email )
Department of Finance
2001 Sheridan Road
Evanston, IL 60208-2001
United States
HOME PAGE: http://www.kellogg.northwestern.edu/faculty/vissing/htm/research1.htm
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
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