The Real Effects of SOX Section 404: Evidence from Corporate Innovation
نویسندگان
چکیده
This paper exploits a natural quasi-experiment to investigate the effects of the Sarbanes-Oxley Act (SOX) on corporate innovation: firms with a public float under $75 million can delay compliance with Section 404 of the Act. We find a significant decrease in the number of patents and patent citations for firms that are subject to Section 404 compliance relative to firms that are not. This effect is more pronounced when firms are financially constrained and when firms face high litigation risk. Overall, our evidence indicates that SOX imposes real costs to the economy by decreasing corporate innovativeness.
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تاریخ انتشار 2017