Discussion of 'A Lobbying Approach to Evaluating the Sarbanes-Oxley Act of 2002'

This article discusses the main contributions and findings of Hochberg, Sapienza and Vissing-Jorgensen's 'A Lobbying Approach to Evaluating the Sarbanes-Oxley Act of 2002.' I offer a synopsis of the Journal of Accounting Research conference discussion of the paper as well as provide some broader perspectives on the two main lines of inquiry to which the paper contributes. The first perspective focuses on the impact of the Sarbanes-Oxley Act (SOX) and, in particular, how this study and others face the challenge of benchmarking of the price and quantity effects of the Act. I discuss the strengths and weaknesses of the authors' identification strategy that separates out firms whose insiders actively lobbied the Securities and Exchange Commission's rule-making process in the aftermath of SOX. The second perspective considers the motivations for and consequences of lobbying activity. I survey existing research in Economics, Accounting and Management which shows that lobbying propensity is predictable, confirms it is most likely to be conducted by agents most affected by the rule changes, but also warns that there are firm-specific, industry-specific, and even issue-specific factors that can complicate these interpretations.