Did accelerated filing requirements and SOX Section 404 affect the timeliness of 10-K filings?

How Do Informational Frictions Affect the Firm’s Choice of Asset Liquidity? The Effect of SOX Section 404

Although existing theories predict a causal link between informational frictions in financial markets and a firm’s choice of asset liquidity, the lack of an exogenous and clean measure of informational frictions hinders the precise identification of this link. Using the discontinuous requirement of financial reporting introduced by Section 404 of the Sarbanes-Oxley Act, we identify a causal eff...

The Real Effects of SOX Section 404: Evidence from Corporate Innovation

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 effec...

A Measure of Competition Based on 10-K Filings

In this paper we develop a measure of competition based on management’s disclosures in their 10-K filing and find that firms’ rates of diminishing marginal returns on new and existing investment vary significantly with our measure. We show that these firm-level disclosures are related to existing industry-level measures of disclosure (e.g. Herfindahl index), but capture something distinctly new...

Tax Laws and Filing Requirements

Does SOX 404 Have Teeth? Consequences of the Failure to Report Existing Internal Control Weaknesses

We identify a sample of firms with restatements attributable to underlying control weaknesses, some which had previously reported these weaknesses as required by SOX 404 and some of which acknowledged them only after announcing the related restatement. We then examine whether various penalties that could serve as enforcement mechanisms for SOX 404 differ across these two groups. We find no evid...