A Lobbying Approach to Evaluating the Sarbanes-Oxley Act of 2002 / Yael V. Hochberg, Paola Sapienza, Annette Vissing-Jorgensen.

Format:

Book

Author/Creator:

Hochberg, Yael V.

Contributor:

National Bureau of Economic Research.

Sapienza, Paola.

Vissing-Jorgensen, Annette.

Series:

Working Paper Series (National Bureau of Economic Research) no. w12952.

NBER working paper series no. w12952

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2007.

Summary:

We evaluate the net benefits of the Sarbanes-Oxley Act (SOX) for shareholders by studying the lobbying behavior of investors and corporate insiders to affect the final implemented rules under the Act. Investors lobbied overwhelmingly in favor 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.

Notes:

Print version record

March 2007.