Abstract

http://ssrn.com/abstract=1561619
 
 

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Did SOX Section 404 Make Firms Less Opaque? Evidence from Cross-Listed Firms


Stefan Arping


University of Amsterdam - University of Amsterdam Business School; Tinbergen Institute

Zacharias Sautner


Frankfurt School of Finance & Management gemeinnützige GmbH

August 01, 2012

Contemporary Accounting Research, Forthcoming

Abstract:     
We study whether Section 404 of the Sarbanes-Oxley Act of 2002 made cross-listed firms less opaque via an examination of analyst earnings forecasts. To test this, we compare European Union (EU) firms that are cross-listed in the US — and therefore subject to S404 — with comparable EU firms that are not cross listed. We find that while both types of firms experienced a decrease in opaqueness over time, this decrease was significantly larger for cross-listed firms. Our results are robust to accounting for concurrent sell-side analyst regulations in the US, delistings, and changes in corporate risk taking. Overall, our analysis suggests that SOX had a positive effect on corporate disclosure quality.

Number of Pages in PDF File: 40

Keywords: Sarbanes-Oxley Act, Analyst Forecasts, Corporate Governance, Disclosure Regulation

JEL Classification: G1, G3

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Date posted: March 2, 2010 ; Last revised: December 19, 2012

Suggested Citation

Arping, Stefan and Sautner, Zacharias, Did SOX Section 404 Make Firms Less Opaque? Evidence from Cross-Listed Firms (August 01, 2012). Contemporary Accounting Research, Forthcoming. Available at SSRN: http://ssrn.com/abstract=1561619 or http://dx.doi.org/10.2139/ssrn.1561619

Contact Information

Stefan Arping
University of Amsterdam - University of Amsterdam Business School ( email )
Roetersstraat 18
Amsterdam, 1018WB
Netherlands
Tinbergen Institute ( email )
Burg. Oudlaan 50
Rotterdam, 3062 PA
Netherlands
Zacharias Sautner (Contact Author)
Frankfurt School of Finance & Management gemeinnützige GmbH ( email )
Sonnemannstraße 9-11
Frankfurt am Main, 60314
Germany
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