An extensive literature across law, accounting, economics and finance has analyzed the compliance costs of securities regulation. In the US context, the Sarbanes-Oxley (hereafter SOX) legislation enacted in 2002 has been a particular focus of attention. However, its social welfare consequences remain controversial. My new working paper on Estimating the Compliance Costs of Securities Regulation: A Bunching Analysis of Sarbanes-Oxley Section 404(b) brings both a novel dataset and a new empirical approach to bear on this important question. Many of the most significant provisions of pre-SOX—in particular, auditor attestation of internal controls under Section 404(b)—have been applied only to firms at or above a threshold of $75 million of “public float” (i.e. the market value of shares held by non-insiders); firms satisfying this threshold are referred to as “accelerated filers.”

Read more at Harvard Law School Forum on Corporate Governance and Financial Regulation