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Why Do Foreign Firms Leave U.S. Equity Markets?




Foreign firms terminate their Securities and Exchange Commission registration in the aftermath of the Sarbanes-Oxley Act (SOX) because they no longer require outside funds to finance growth opportunities. Deregistering firms' insiders benefit from greater discretion to consume private benefits without having to raise higher cost funds. Foreign firms with more agency problems have worse stock-price reactions to the adoption of Rule 12h-6 in 2007, which made deregistration easier, than those firms more adversely affected by the compliance costs of SOX. Stock-price reactions to deregistration announcements are negative, but less so under Rule 12h-6, and more so for firms that raise fewer funds externally. Copyright (c) 2010 The American Finance Association.

Suggested Citation

  • Craig Doidge & G. Andrew Karolyi & René M. Stulz, 2010. "Why Do Foreign Firms Leave U.S. Equity Markets?," Journal of Finance, American Finance Association, vol. 65(4), pages 1507-1553, August.
  • Handle: RePEc:bla:jfinan:v:65:y:2010:i:4:p:1507-1553

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    References listed on IDEAS

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    22. repec:bla:joares:v:21:y:1983:i:1:p:184-221 is not listed on IDEAS
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    More about this item

    JEL classification:

    • F30 - International Economics - - International Finance - - - General
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance


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