Was Sarbanes-Oxley Costly? Evidence from Optimal Contracting on CEO Compensation

Was Sarbanes-Oxley Costly? Evidence from Optimal Contracting on CEO Compensation1

This paper investigates the effects of the Sarbanes-Oxley Act (SOX) on CEO compensation, using panel data constructed for the S&P 1500 firms on CEO compensation, financial returns, and reported accounting income. Empirically SOX (i) changes the relationship between a firm’s abnormal returns and CEO compensation, (ii) changes the underlying distribution of abnormal returns, and (iii) significant...

Was the Sarbanes-Oxley Act good news for corporate bondholders?

This study examines the impact of the Sarbanes-Oxley Act (SOX) on bondholders, a significant investor group that has not been previously considered in the SOX literature. We find that bond values decline around the announcement of events leading up to the passage of SOX, consistent with market participants expecting SOX to impose net costs on bondholders. We further find that the decline in bon...

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...

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