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.
Ehud Kamar, Pinar Karaca-Mandic & Eric L. Talley,
Going-Private Decisions and the Sarbanes-Oxley Act of 2002: A Cross-Country Analysis,
Journal of Law, Economics & Organization, Vol. 25, p. 107, 2009; UC Berkeley Public Law Research Paper No. 901769; USC Law Legal Studies Paper No. 06-10; USC CLEO Research Paper No. C06-5
Available at: https://scholarship.law.columbia.edu/faculty_scholarship/1409