SOX Section 404 and Corporate Innovation

• Published in: Journal of financial and quantitative analysis Vol. 54; no. 2; pp. 759 - 787
• Main Authors: Gao, Huasheng, Zhang, Jin
• Format: Journal Article
• Language: English
• Published: Seattle Cambridge University Press 01.04.2019
• Subjects: Annual reports; Citations; Companies; Compliance; Costs; Financial reporting; Innovations; Litigation; Managers; Quantitative analysis; Trends

This paper exploits a quasi-natural experiment to investigate the relation between the Sarbanes–Oxley Act (SOX) of 2002 and corporate innovation: firms with a public float under $75 million can delay compliance with Section 404 of the act. We find a significant decrease in the number of patents and...