A Lobbying Approach to Evaluating the Sarbanes-Oxley Act of 2002

Paola Sapienza, Vissing-Jørgensen, Annette and Yael Hochberg
Authors registered in the RePEc Author Service: Annette Vissing-Jorgensen

No 6201, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We evaluate the net benefits of the Sarbanes-Oxley Act (SOX) for shareholders by studying the lobbying behaviour of investors and corporate insiders to affect the final implemented rules under the Act. Investors lobbied overwhelmingly in favour of strict implementation of SOX, while corporate insiders and business groups lobbied against strict implementation. We identify the firms most affected by the law as those whose insiders lobbied against strict implementation, and compare their returns to the returns of less affected firms. Cumulative returns during the four and a half months leading up to passage of SOX were approximately 10 percent higher for corporations whose insiders lobbied against one or more of the SOX disclosure-related provisions than for similar non-lobbying firms. Analysis of returns in the post-passage implementation period indicates that investors? positive expectations with regards to the effects of the law were warranted for the enhanced disclosure provisions of SOX.

Keywords: Corporate governance; Sarbanes oxley act (search for similar items in EconPapers)
JEL-codes: G34 K22 (search for similar items in EconPapers)
Date: 2007-03
New Economics Papers: this item is included in nep-law, nep-pol and nep-reg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Related works:
Journal Article: A Lobbying Approach to Evaluating the Sarbanes‐Oxley Act of 2002 (2009)
Working Paper: A Lobbying Approach to Evaluating the Sarbanes-Oxley Act of 2002 (2007)
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