Cross-listing and Firm Information Environment: Does SOX Section 302 Have Any Material Effect?*
نویسندگان
چکیده
Previous literature documents that foreign firms cross-listed in the U.S. Stock Exchanges experience an improvement in the information environment. This paper disputes the idea that cross-listing per se increases the quality of the firm information environment by considering whether this enhancement depends on the effective adoption of stricter rules. As research setting, we use Section 302 of the Sarbanes-Oxley Act that requires US listed firms to disclose any discovered internal control deficiency on internal controls over financial reporting. Our findings support the idea that the quality of the firm information environment is higher for cross-listed firms than for their home country peers only when cross-listed firms effectively commit themselves to higher levels of corporate transparency. Our results are robust to the endogeneity of cross-listing decision and to unobservable factors related to internal control deficiency. JEL classification: M41, G14, G15, K22
منابع مشابه
The Impact of Information Disclosure on Stock Market Returns: The Sarbanes-Oxley Act and the Role of Media as an Information Intermediary
The Sarbanes-Oxley (SOX) Act of 2002 is one of the, if not the, most important pieces of legislation affecting corporations traded on the U.S. stock exchanges. While SOX does not explicitly address the issue of information security, the definition of internal control provided by the SEC, combined with the fact that the reporting systems in all firms required to comply with SOX are based on syst...
متن کاملHas New York become less competitive than London in global markets? Evaluating foreign listing choices over time
We study the determinants and consequences of cross-listings on the New York and London stock exchanges from 1990 to 2005. This investigation enables us to evaluate the relative benefits of New York and London exchange listings and to assess whether these relative benefits have changed over time, perhaps as a result of the passage of the Sarbanes-Oxley Act in 2002. We find that cross-listings h...
متن کاملEconomic Consequences of the Sarbanes–oxley Act on E-commerce Firms
Regulators and practitioners are concerned about whether SOX Sections 302 and 404 IT-related implementation costs affect the market value of firms in the IT industry. Prior studies indicate that network advantages are the key feature of information-based industries and that E-commerce firms are a major segment of that industry. SOX Section 404 was expected to have significant impact on firms wi...
متن کاملThe Impact of Information Technology Internal Controls on Firm Performance
Since the introduction of the Sarbanes-Oxley (SOX) Act in 2002, companies have begun to place more emphasis on information technology (IT) internal controls. IT internal controls are policies that provide assurance that technical systems operate as intended, provide reliable data, and comply with regulations. Research suggests that firms with strong internal controls perform better than those w...
متن کاملThe Effect of SOX Internal Control Deficiencies on Firm Risk and Cost of Equity
The Sarbanes-Oxley Act (SOX) mandates management evaluation and independent audits of internal control effectiveness. The mandate is costly to firms but may yield benefits through lower information risk that translates into lower cost of equity. We use unaudited pre-SOX 404 disclosures and SOX 404 audit opinions to assess how changes in internal control quality affect firm risk and cost of equi...
متن کامل