The Impact of the Sarbanes-Oxley Act on the Dual-Class Voting Premium

@article{Gao2019TheIO,
  title={The Impact of the Sarbanes-Oxley Act on the Dual-Class Voting Premium},
  author={Feng Gao and Ivy Xiying Zhang},
  journal={The Journal of Law and Economics},
  year={2019},
  volume={62},
  pages={181 - 214}
}
  • F. Gao, I. Zhang
  • Published 1 February 2019
  • Economics, Business
  • The Journal of Law and Economics
We examine the impact of corporate governance laws on the private benefits of control, using the enactment of the Sarbanes-Oxley Act of 2002 (SOX) as a natural quasi experiment. We find a large decline in the average voting premium of US dual-class firms targeted by major SOX provisions that enhance boards’ independence, improve internal controls, and increase litigation risks. The targeted firms also improve the efficiency of investment, cash management, and chief executive officers… 
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