Going-Private Decisions and the Sarbanes-Oxley Act of 2002: A Cross-Country Analysis

Kamar, Ehud; Karaca-Mandic, Pinar; Talley, Eric L.

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Going-Private Decisions and the Sarbanes-Oxley Act of 2002: A Cross-Country Analysis

USC CLEO Research Paper No. C06-5

USC Law Legal Studies Paper No. 06-10

UC Berkeley Public Law Research Paper No. 901769

49 Pages Posted: 12 May 2006 Last revised: 5 Dec 2008

See all articles by Ehud Kamar

Ehud Kamar

Tel Aviv University - Buchmann Faculty of Law; European Corporate Governance Institute (ECGI)

Eric L. Talley

Columbia University - School of Law; European Corporate Governance Institute (ECGI)

There are 2 versions of this paper

Date Written: December 1, 2008

Abstract

This article investigates whether the passage and the implementation of the Sarbanes-Oxley Act of 2002 (SOX) drove firms out of the public capital market. To control for other factors affecting exit decisions, we examine the post-SOX change in the propensity of public American targets to be bought by private acquirers rather than public ones with the corresponding change for foreign targets, which were outside the purview of SOX. Our findings are consistent with the hypothesis that SOX induced small firms to exit the public capital market during the year following its enactment. In contrast, SOX appears to have had little effect on the going-private propensities of larger firms.

Keywords: Sarbanes-Oxley, Mergers, Going Private, Law and Finance, Securities Markets

JEL Classification: G30, G34, G38, K22

Suggested Citation: Suggested Citation

Kamar, Ehud and Karaca-Mandic, Pinar and Talley, Eric L., Going-Private Decisions and the Sarbanes-Oxley Act of 2002: A Cross-Country Analysis (December 1, 2008). USC CLEO Research Paper No. C06-5, USC Law Legal Studies Paper No. 06-10, UC Berkeley Public Law Research Paper No. 901769, Available at SSRN: https://ssrn.com/abstract=901769