Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/86999 
Year of Publication: 
2010
Series/Report no.: 
Tinbergen Institute Discussion Paper No. 10-129/2/DSF 5
Publisher: 
Tinbergen Institute, Amsterdam and Rotterdam
Abstract: 
We study whether the Sarbanes-Oxley Act (SOX) of 2002 made firms less opaque. For identification, we use a difference-in-differences estimation approach and compare EU firms that are cross-listed in the US—and therefore subject to SOX—with comparable EU firms that are not cross-listed. We derive proxies for corporate opaqueness from analyst earnings forecasts. Our findings suggest that, relative to the control group, cross-listed firms became significantly less opaque after the implementation of SOX. We provide evidence that this effect was particularly pronounced for firms operating in informationally sensitive industries. We complement our analysis with a textual analysis of corporate annual reports in order to shed light on how SOX may have affected firms’ reporting behavior.
Subjects: 
Sarbanes-Oxley Act
Analyst Forecasts
Corporate Governance
Disclosure Regulation
JEL: 
G1
G3
Document Type: 
Working Paper

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