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The Use of Discretion in Reporting Public Float

Feng Gao

University of Illinois at Chicago

December 15, 2010

This paper investigates how firms use discretion in reporting public float, in the context of Sox Section 404. I find that some non-accelerated filers try to delay compliance by underreporting public float to stay below the $75 million threshold. They are less likely to do so after becoming accelerated filers. Using a cost-benefit analysis, I find that firms with high expected compliance costs are more likely to underreport to keep their filing status. Those with new financing need or becoming merger targets are less likely to underreport because they benefit from lower costs of capital and information risk from compliance.

Number of Pages in PDF File: 59

Keywords: SOX, Section 404, Public Float, Form S-3, Security Registration

JEL Classification: G18, K22, M41, M4

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Date posted: February 7, 2010 ; Last revised: March 24, 2011

Suggested Citation

Gao, Feng, The Use of Discretion in Reporting Public Float (December 15, 2010). Available at SSRN: http://ssrn.com/abstract=1549165 or http://dx.doi.org/10.2139/ssrn.1549165

Contact Information

Feng Gao (Contact Author)
University of Illinois at Chicago ( email )
Accounting Department
Chicago, IL 60305
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References:  44
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