The Impact of the Sarbanes-Oxley Act on Firms Going Private

Posted: 28 Nov 2006

See all articles by Nancy Mohan

Nancy Mohan

University of Dayton

Carl R. Chen

University of Dayton

Abstract

We study the impact of Sarbanes-Oxley Act (SOX) on the characteristics of firms going private based upon a sample of 147 companies during the period of June 13, 2000 to October 3, 2003. We partition the sample into pre-SOX and post-SOX periods, and cluster analysis is employed to identify firms with similar characteristics. One group of firms is identified before the Sarbanes-Oxley Act, while two groups of firms are identified after the Act. Parametric and non-parametric tests confirm a small group of firms going private with characteristics consistent with the contention that Sarbanes-Oxley Act drives these firms private due to heavy monitoring cost.

Keywords: Sarbanes-Oxley Act, going private, cluster analysis

JEL Classification: K22, G24, G38

Suggested Citation

Mohan, Nancy and Chen, Carl R., The Impact of the Sarbanes-Oxley Act on Firms Going Private. Research in Accounting Regulation, Vol. 19, 2006, Available at SSRN: https://ssrn.com/abstract=947358

Nancy Mohan (Contact Author)

University of Dayton ( email )

300 College Park
Dayton, OH 45469
United States
513-229-2416 (Phone)
513-229-2477 (Fax)

Carl R. Chen

University of Dayton ( email )

300 College Park
Dayton, OH 45469-2251
United States
937-229-2418 (Phone)
937-229-2477 (Fax)

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