When I was in New York to promote The Complete Guide to Sarbanes-Oxley at a Manhattan Institute luncheon, I mentioned a number of SOX books and articles that I recommend. I promised to post them to the blog, so here they are:
Henry Butler & Larry Ribstein, The Sarbanes-Oxley Debacle
The Sarbanes-Oxley Act of 2002 (SOX) is a colossal failure, poorly conceived and hastily enacted during a regulatory panic. SOX should be repealed, but failing that, there is some hope that a recent lawsuit could provide the leverage to enact some major changes. The Sarbanes-Oxley Debacle seeks to salvage some lessons from the ruins of SOX.
Ehud Kamar et al., Going-Private Decisions and the Sarbanes-Oxley Act of 2002: A Cross-Country Analysis
We investigate whether the Sarbanes-Oxley Act of 2002 (SOX) has driven 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, large firms do not appear to have been affected.
Ehud Kamar et al, Sarbanes-Oxley's Effects on Small Firms: What is the Evidence?
This article presents an overview of the regulatory regime created by the Sarbanes-Oxley Act of 2002 (SOX) and its implications for small firms. We review the available evidence in three distinct domains: compliance costs, stock price reactions, and firms' decisions to exit regulated securities markets.
Kate Litvak, Sarbanes-Oxley and the Cross-Listing Premium
This article tests whether the Sarbanes-Oxley Act (“SOX”) affected the premium that investors are willing to pay for shares of foreign companies cross-listed in the United States. I find that from year-end 2001 (pre-SOX) to year-end 2002 (after SOX adoption), the Tobin's q and market/book ratios of foreign companies subject to SOX (cross-listed on levels 2 or 3) declined significantly, relative to Tobin's q and market/book ratios of both (i) matching non-cross-listed foreign companies from the same country, the same industry, and of similar size, and (ii) cross-listed companies from the same country that are not subject to SOX (listed on levels 1 or 4), whose Tobin's q and market/book ratios declined only slightly and increased in some specifications, compared to matching non-cross-listed companies. Thus, the premium associated with trading in the United States was roughly constant, while the premium associated with being subject to U.S. regulation declined. The biggest losers were companies that were more profitable, riskier, and smaller, companies with a higher level of pre-SOX disclosure, and companies from well-governed countries. These results are consistent with the view that investors expected SOX to have greater costs than benefits for cross-listed firms on average, especially for smaller firms and already well-governed firms.
In a related paper, Kate Litvak, The Effect of the Sarbanes-Oxley Act on Foreign Companies Cross-Listed in the U.S., Journal of Corporate Finance (forthcoming 2007), I conduct an event study of the reaction of level-23 cross-listed companies, and find that their prices declined during SOX-relevant event periods, relative to level-14 cross-listed companies and non-cross-listed companies.
Roberta Romano, The Advantage of Competitive Federalism for Securities Regulation
In this incisive analysis of securities regulation, Roberta Romano demonstrates that the current approach toward United States securities regulation by the SEC should be revamped by implementing a regime of competitive federalism.
Of course, at the end of the day, your best SOX resource is still The Complete Guide to Sarbanes-Oxley.
