Firm value, the Sarbanes-Oxley Act and cross-listing in the U.S., Germany and Hong Kong destinations

This paper presents empirical evidence on the effects of the Sarbanes-Oxley Act of 2002 on the value of firms and on the cross-listing choice of firms destined to three major markets in North America, Asia and Europe. We use dynamic panel data methods and treatment effects methods and find that Sarbanes-Oxley has had a negative impact on the value of firms worldwide. Our evidence indicates that Sox may have segmented markets, with many lower valued firms destined to Hong Kong, thus crowding out the market where regulation is more stringent.

► Sarbanes-Oxley (Sox) Act of 2002. ► Negative impact of Sox on value of firm. ► Sox leaded to segmented capital markets. ► Sox discouraged firms to cross-list in the U.S. ► Sox induced firms to cross-list in less regulated countries.