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

40 Pages Posted: 2 Mar 2010 Last revised: 30 Jan 2015

See all articles by Stefan Arping

Stefan Arping

University of Amsterdam Business School; Tinbergen Institute

Zacharias Sautner

Frankfurt School of Finance & Management; European Corporate Governance Institute (ECGI)

Date Written: August 1, 2012


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.

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

JEL Classification: G1, G3

Suggested Citation

Arping, Stefan and Sautner, Zacharias, Did SOX Section 404 Make Firms Less Opaque? Evidence from Cross-Listed Firms (August 1, 2012). Contemporary Accounting Research, 30, 2013, 1133–1165 , Available at SSRN: https://ssrn.com/abstract=1561619 or http://dx.doi.org/10.2139/ssrn.1561619

Stefan Arping

University of Amsterdam Business School ( email )

Roetersstraat 18
Amsterdam, 1018WB

Tinbergen Institute ( email )

Burg. Oudlaan 50
Rotterdam, 3062 PA

Zacharias Sautner (Contact Author)

Frankfurt School of Finance & Management ( email )

Adickesallee 32-34
Frankfurt am Main, 60322

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Abstract Views
PlumX Metrics