The Effects of Canadian SOX on the Price Discount of Canadian Equity Offerings
The International Journal of Business and Finance Research, v. 14 (1) p. 71-84
14 Pages Posted: 13 Feb 2020
Date Written: 2020
This study studies the effects of Canadian SOX on the price discount of seasoned equality offerings of Canadian issuers. Canadian SOX is legislation similar to the U.S. Sarbanes-Oxley of 2002. It passed in October 2002 and became effective December 2005. It finds Canadian SOX did not have a significant effect on the offer price discount of all Canadian issuers. These include those listed on the Toronto Stock Exchange only and those simultaneously listed on the Toronto Stock Exchange and major U.S. exchanges (cross-listed). On the other hand, when distinguishing offers by underwriting method, the price discount is not different between bought deals and marketed underwritten offers after the passage of Canadian SOX. These findings are consistent with the general hypothesis the Canadian law should not have a significant effect in the price discount of equity offers. This is because the 3-year period allowed regulators, issuers, investors, and investment banks enough time to adapt to the new law with minimum effects. Unlike Sarbanes-Oxley, where many difficulties have occurred in its implementation.
Keywords: Canadian Sox, Seasoned Equity Offerings, Price Discount, Sarbanes-Oxley Act, Cross- Listed, Bought Deals, Marketed Underwritten Offers
JEL Classification: G24, G32
Suggested Citation: Suggested Citation