Compliance costs and disclosure requirement mandates: Some evidence

Document Type

Article

Source of Publication

Research in Accounting Regulation

Publication Date

1-1-2015

Abstract

© 2015 Elsevier Ltd. This note contributes to the discussion on the compliance costs of disclosure requirements for publicly traded companies. Prior research tends to focus on audit cost increases when disclosure requirements are stricter. We add some evidence from the point of views of shareholders. Particularly, we contrast stock market reaction to the 2002 Sarbanes-Oxley (SOX) Act which significantly enhanced public company disclosure requirements, with the 2012 Jumpstart Our Business Startups (JOBS) Act which alleviated disclosure requirements for small firms. Contrary to popular belief that more disclosure rules impose regulatory burdens on firms and are costly to implement, we find that the stock market reacted positively toward rules that require more disclosure; whereas it reacted negatively toward rules that require less disclosure, even though those disclosure rules were initially designed to reduce the costs of compliance.

ISSN

1052-0457

Publisher

Elsevier Ltd

Volume

27

Issue

1

First Page

83

Last Page

87

Disciplines

Business

Keywords

Costs of compliance, Disclosure rules, Jumpstart our business startups act, Market reactions, Sarbanes-Oxley Act

Scopus ID

84928429625

Indexed in Scopus

yes

Open Access

no

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