Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/103701
Authors: 
Kaserer, Christoph
Mettler, Alfred
Obernberger, Stefan
Year of Publication: 
2011
Citation: 
[Journal:] BuR - Business Research [ISSN:] 1866-8658 [Volume:] 4 [Year:] 2011 [Issue:] 2 [Pages:] 125-147
Abstract: 
This paper examines the impact of the Sarbanes-Oxley Act (SOX), a legal framework intended to increase transparency and accountability of listed companies, on the cost of going public in the US. We expect SOX to increase the direct cost of going public, but decrease the underpricing because of reduced asymmetric information. Our main results corroborate these hypotheses. First, we find an increase in the cost of going public of 90 bp of gross proceeds. Second, we record a reduction in underpricing of 6 pp, which is related to a reduced offer price adjustment. This supports our hypothesis that SOX represents a mechanism to reduce asymmetric information.
Subjects: 
asymmetric information
auditing and legal fees
bookbuilding
IPO
flotation cost
going public
partial adjustment phenomenon
propensity score matching
selection bias
SOX
underpricing
underwriting fees
Persistent Identifier of the first edition: 
Document Type: 
Article

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