Corporate Governance, Sarbanes-Oxley, and Small-Cap Firm Performance

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CFA Digest
May 2008 | Vol. 38 | No. 2 | 2 pages
Source: CFA Institute
Lorne N. Switzer
Daniel J. Larocco, CFA (Reviewer)

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Abstract

Many people have argued that the Sarbanes–Oxley Act of 2002 (SOX) places an excessive reporting burden on small companies. The author examines this hypothesis by comparing the market valuations of small-capitalization Canadian companies that are subject to SOX with those that are not. The results indicate that companies subject to SOX experience a 15.7–34 percent improvement in market value, depending on how board independence is measured.

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Topics
Corporate Finance
    :
  • Corporate Governance
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