An Examination of the Impact of the Sarbanes-Oxley Act – IEMS’ Xi Li Featured in SCMP Education Post


IEMS’ Xi Li was featured in the SCMP Education Post, which carried a research summary by Prof. Li on his research studies into the U.S. Sarbanes-Oxley Act (SOX) of 2002, which was meant to strengthen corporate governance and financial reporting in the US in the wake of several corporate scandals. He used this as a starting point to examine how SOX has negatively affected foreign private issuers.

As quoted in the article, Prof. Li stated:

“In summary, the results suggest not only that SOX imposes net costs on shareholders in going-dark FPIS, but also the net costs more than offset the extant net benefits from cross-listing (including legal-bonding benefits) for these FPIs.

“Going dark in the pre- and post-SOX periods appears to be driven by reduced growth potentials and increased compliance costs, respectively” – leading to the additional conclusion that there is weak support for the legal bonding hypothesis for FPIs in general, and that this needs to be examined further in future.

Read the full article here: SCMP Education Post

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