Review of Accounting Studies

, Volume 14, Issue 2–3, pp 401–439 | Cite as

The robustness of the Sarbanes Oxley effect on the U.S. capital market



We examine the incidence of new listings and delistings on U.S. stock exchanges and firms’ propensity to delist, as a function of general market conditions, firm fundamentals, and the costs of compliance with the Sarbanes Oxley Act (SOX). We find that both general market conditions and firm fundamentals explain the delisting incidence and firms’ delisting decisions; while SOX variables are positively associated with firms’ delisting likelihood only when general market conditions are not included in the analyses. Further analyses on the population partitioned into size quintiles suggest that the passage of SOX was not associated with an increase in the likelihood of delisting for any size quintile of firms and that the implementation of SOX section 404 is positively associated with the delisting likelihood for midsized and larger firms. Our empirical evidence is useful to regulators as they consider changes in the imposition and implementation of SOX section 404.


Sarbanes-Oxley Delistings New listings 

JEL Classification

G18 M40 M41 M48 


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Copyright information

© Springer Science+Business Media, LLC 2009

Authors and Affiliations

  1. 1.Whittemore School of Business and EconomicsUniversity of New HampshireDurhamUSA
  2. 2.Goizueta Business SchoolEmory UniversityAtlantaUSA

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