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Market Perception of SOX Act in the Case of US Listed Banks


  • Martina Vitézová


This paper examines the net effect of Sarbanes – Oxley Act of 2002 onto market valuation of bank holding shares. Overall analysis finds significant price growth in the years following the SOX Act. At the same time liquidity of the bank shares has improved, which implies SOX Act has produced benefits for US listed bank holdings. When analyzing shorter sequences, we confirm that banking industry enjoys reputation as well regulated industry as opposed to other industries, which drove the share prices and liquidity up.

Suggested Citation

  • Martina Vitézová, 2011. "Market Perception of SOX Act in the Case of US Listed Banks," European Research Studies Journal, European Research Studies Journal, vol. 0(4), pages 155-170.
  • Handle: RePEc:ers:journl:v:xiv:y:2011:i:4:p:155-170

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    References listed on IDEAS

    1. Pankaj K. Jain & Jang-Chul Kim & Zabihollah Rezaee, 2008. "The Sarbanes-Oxley Act of 2002 and Market Liquidity," The Financial Review, Eastern Finance Association, vol. 43(3), pages 361-382, August.
    2. Hollis Ashbaugh-Skaife & Daniel W. Collins & William R. Kinney Jr & Ryan Lafond, 2009. "The Effect of SOX Internal Control Deficiencies on Firm Risk and Cost of Equity," Journal of Accounting Research, Wiley Blackwell, vol. 47(1), pages 1-43, March.
    3. Ahmed, Anwer S. & McAnally, Mary Lea & Rasmussen, Stephanie & Weaver, Connie D., 2010. "How costly is the Sarbanes Oxley Act? Evidence on the effects of the Act on corporate profitability," Journal of Corporate Finance, Elsevier, vol. 16(3), pages 352-369, June.
    4. John C. Coates IV, 2007. "The Goals and Promise of the Sarbanes-Oxley Act," Journal of Economic Perspectives, American Economic Association, vol. 21(1), pages 91-116, Winter.
    5. Zhang, Ivy Xiying, 2007. "Economic consequences of the Sarbanes-Oxley Act of 2002," Journal of Accounting and Economics, Elsevier, vol. 44(1-2), pages 74-115, September.
    6. Litvak, Kate, 2007. "The effect of the Sarbanes-Oxley act on non-US companies cross-listed in the US," Journal of Corporate Finance, Elsevier, vol. 13(2-3), pages 195-228, June.
    7. Huizinga, Harry & Laeven, Luc, 2008. "International profit shifting within multinationals: A multi-country perspective," Journal of Public Economics, Elsevier, vol. 92(5-6), pages 1164-1182, June.
    8. Allaudeen Hameed & Wenjin Kang & S. Viswanathan, 2010. "Stock Market Declines and Liquidity," Journal of Finance, American Finance Association, vol. 65(1), pages 257-293, February.
    9. Marcia Millon Cornett & Hamid Mehran & Hassan Tehranian, 1998. "Are Financial Markets Overly Optimistic about the Prospects of Firms That Issue Equity? Evidence from Voluntary versus Involuntary Equity Issuances by Banks," Journal of Finance, American Finance Association, vol. 53(6), pages 2139-2159, December.
    10. Leuz, Christian, 2007. "Was the Sarbanes-Oxley Act of 2002 really this costly? A discussion of evidence from event returns and going-private decisions," Journal of Accounting and Economics, Elsevier, vol. 44(1-2), pages 146-165, September.
    11. 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.
    12. Brennan, Michael J & Hughes, Patricia J, 1991. " Stock Prices and the Supply of Information," Journal of Finance, American Finance Association, vol. 46(5), pages 1665-1691, December.
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    More about this item


    Sarbanes-Oxley Act; Bank Share Price Valuation; Liquidity; Equity Market of the US;

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • M48 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Government Policy and Regulation


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