2016
DOI: 10.2139/ssrn.2817151
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Estimating the Compliance Costs of Securities Regulation: A Bunching Analysis of Sarbanes-Oxley Section 404(B)

Abstract: An extensive literature has analyzed the Sarbanes-Oxley (SOX) legislation enacted in 2002, but its social welfare consequences remain controversial. One of the most significant provisions of SOX-auditor attestation of internal controls under Section 404(b)-has been applied only to firms that have a public float (i.e. the market value of shares held by non-insiders) of at least $75 million. Public float is not reported in standard databases; this paper "scrapes" public float data from 10-K filings, resulting in… Show more

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Cited by 3 publications
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“…7 For example, researchers have explored the direct costs of the SOX 404(b) exemption (Iliev, 2010) or surveyed firms to gather data on equilibrium direct costs (Coates, 2007). Gao et al (2009), Dharmapala (2016), Khaled and Moon (2020), and Liu (2020) also exploit the bunching of firms around regulatory thresholds. The fuzzy bunching estimator does not require a lack of public float manipulation, but rather translates observed manipulation to regulation costs in dollar terms using a revealed preference approach.…”
mentioning
confidence: 99%
“…7 For example, researchers have explored the direct costs of the SOX 404(b) exemption (Iliev, 2010) or surveyed firms to gather data on equilibrium direct costs (Coates, 2007). Gao et al (2009), Dharmapala (2016), Khaled and Moon (2020), and Liu (2020) also exploit the bunching of firms around regulatory thresholds. The fuzzy bunching estimator does not require a lack of public float manipulation, but rather translates observed manipulation to regulation costs in dollar terms using a revealed preference approach.…”
mentioning
confidence: 99%