Unintended Consequences of Granting Small Firms Exemptions from Securities Regulation: Evidence from the Sarbanes-Oxley Act

63 Pages Posted: 30 Apr 2009

See all articles by Joanna S. Wu

Joanna S. Wu

University of Rochester - Simon Business School

Jerold L. Zimmerman

University of Rochester - Simon Business School

Multiple version iconThere are 2 versions of this paper

Date Written: 2008-11-13

Abstract

Economists have long recognized that government regulations often generate unintended consequences.1 The initial Securities Act of 1933 and the Securities Exchange Act of 1934 exempted small firms from certain filing requirements. The SEC expanded these exemptions in implementing the Sarbanes Oxley Act of 2002 (SOX). Beyond securities regulations, numerous statutory and regulatory exemptions exist for small businesses (Bradford, 2004). This paper presents evidence that exempting small firms from restrictive regulatory requirements (SOX in this case) generates the unintended consequence of creating incentives for some of these firms to remain small.

Suggested Citation

Wu, Joanna and Zimmerman, Jerold L., Unintended Consequences of Granting Small Firms Exemptions from Securities Regulation: Evidence from the Sarbanes-Oxley Act (2008-11-13). Available at SSRN: https://ssrn.com/abstract=1378284 or http://dx.doi.org/10.1111/j.1475-679X.2009.00319.x

Joanna Wu

University of Rochester - Simon Business School ( email )

Carol Simon Hall 3-160D
Rochester, NY 14627
United States
585-275-5468 (Phone)
585-442-6323 (Fax)

Jerold L. Zimmerman

University of Rochester - Simon Business School ( email )

Rochester, NY 14627
United States
585-275-3397 (Phone)
585-442-6323 (Fax)

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