The effect of SOX section 404: Costs, earnings quality, and stock prices

Peter Iliev

doi:10.1111/j.1540-6261.2010.01564.x

The effect of SOX section 404: Costs, earnings quality, and stock prices

Peter Iliev

Finance

Research output: Contribution to journal › Article › peer-review

275 Scopus citations

Abstract

This paper exploits a natural quasi-experiment to isolate the effects that were uniquely due to the Sarbanes-Oxley Act (SOX): U.S. firms with a public float under $75 million could delay Section 404 compliance, and foreign firms under $700 million could delay the auditor's attestation requirement. As designed, Section 404 led to conservative reported earnings, but also imposed real costs. On net, SOX compliance reduced the market value of small firms.

Original language	English (US)
Pages (from-to)	1163-1196
Number of pages	34
Journal	Journal of Finance
Volume	65
Issue number	3
DOIs	https://doi.org/10.1111/j.1540-6261.2010.01564.x
State	Published - Jun 2010

All Science Journal Classification (ASJC) codes

Accounting
Finance
Economics and Econometrics

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10.1111/j.1540-6261.2010.01564.x

Cite this

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The effect of SOX section 404: Costs, earnings quality, and stock prices

Abstract

All Science Journal Classification (ASJC) codes

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