The information content of Sarbanes-Oxley in predicting security breaches

Sarbanes-Oxley - a huge boon to information security in the US

Few pieces of legislation have affected so much so quickly and profoundly as the SarbaneseOxley (often abbreviated ‘‘SoX’’) Act of 2003. Triggered by accounting scandals such as Enron’s several years ago, SoX has many provisions, some of the most important of which require management of publicly traded companies to establish and maintain ‘‘an adequate internal control structure and procedures f...

Regulation and Sarbanes-Oxley

Many of the papers in this special issue are concerned with regulation and some with the Sarbanes-Oxley Act (SOX). In this commentary, I will begin by summarizing the arguments for regulation that have been made in the literature.1 I will then consider whether these arguments apply to SOX. I will suggest that, rather than being based on sound principles, regulation often seems to be a consequen...

Information Content of Public Firm Disclosures and the Sarbanes-Oxley Act∗

We find evidence that public firm disclosure, in the form of Management Discussion and Analysis (Sections 7 and 7a of annual reports), is more informative about the firm’s future risk following the passage of the Sarbanes-Oxley Act of 2002. Employing a novel text regression, we are able to predict, out of sample, firm return volatility using the Management Discussion and Analysis section from a...

Holistic Compliance with Sarbanes-Oxley

The theory underlying US securities laws is that investors are helpless without reliable information [Zelizer, 2002]. When Enron's collapse and other corporate frauds made it clear that "practically every element of our system of safeguards failed until it was too late to repair the damage," Congress reinforced those laws by passing the Sarbanes-Oxley (SARBOX) Act [O'Malley, 2002]. This new law...

Why Sarbanes-Oxley Whistleblowers Don’t Win