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| Author: | Leuz, C. Triantis, A. Wang, T.Y. |
| Title: | Why do firms go dark? Causes and economic consequences of voluntary SEC deregistrations |
| Journal: | Journal of Accounting & Economics
2008 : AUG, VOL. 45:2-3, p. 181-208 |
| Index terms: | disclosure regulations control accounting standards reporting |
| Language: | eng |
| Abstract: | This study investigates a comprehensive sample of going-dark deregistrations where companies cease SEC reporting, still continuing to trade publicly. The paper documents a spike in going dark that is largely attributable to the Sarbanes-Oxley Act (hereafter as: SOX). It analyzes a comprehensive sample of SEC deregistrations from 1998 to 2004. The sample comprises approximately 480 firms. Firms tend to experience large negative abnormal returns when going dark. It is found that many firms do this due to poor future prospects, distress and increased compliance costs after SOX. However, evidence is also found to show that controlling insiders take their firms dark to protect private control benefits and decrease outside scrutiny, especially when governance and investor protection are weak. |
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