The Impact of the Sarbanes-Oxley Act on the Cost of Going Public

This paper examines the impact of the Sarbanes-Oxley Act (SOX), a legal framework intended to increase transparency and accountability of listed companies, on the cost of going public in the US. We expect SOX to increase the direct cost of going public, but decrease the underpricing because of reduced asymmetric information. Our main results corroborate these hypotheses. First, we find an increase in the cost of going public of 90 bp of gross proceeds. Second, we record a reduction in underpricing of 6 pp, which is related to a reduced offer price adjustment. This supports our hypothesis that SOX represents a mechanism to reduce asymmetric information.asymmetric information, auditing and legal fees, bookbuilding, IPO, flotation cost, going public, partial adjustment phenomenon, propensity score matching, selection bias, SOX, underpricing, underwriting fees

The impact of the Sarbanes-Oxley act on the cost of going public

This paper examines the impact of SOX on the total cost and the component cost of going public. First, we document a statistically significant increase in non-underwriting expenses of 0.8 percentage points after the introduction of SOX, which is mostly due to an increase in accounting and legal fees. Because of the fixed-cost character of this component cost, smaller issues show a much greater percentage increase than larger ones. Second, we demonstrate a highly significant reduction in underpricing in the magnitude of about 4 percentage points. This result is size-independent, and in accordance with the view that SOX reduces adverse selection costs. Third, we find that on average the total flotation costs have decreased between 3 and 3.5 percentage points in the post-SOX period. However, for smaller companies the reduction in underpricing does not compensate anymore for the increase in non-underwriting expenses (i.e., accounting and legal fees). Therefore, the positive impact of SOX on the costs of going public decreases with smaller offering sizes. --Sarbanes-Oxley,SOX,IPO,Going Public,Adverse Selection

Green on-site power generation : environmental considerations on small-scale biomass gasifier fuel-cell CHP systems for the residential sector

Contemporary combined heat and power (CHP) systems are often based on fossil fuels, such as natural gas or heating oil. Thereby, small-scale cogeneration systems are intended to replace or complement traditional heating equipment in residential buildings. In addition to space heating or domestic hot water supply, electricity is generated for the own consumption of the building or to be sold to the electric power grid. The adaptation of CHP-systems to renewable energy sources, such as solid biomass applications is challenging, because of feedstock composition and heat integration. Nevertheless, in particular smallscale CHP technologies based on biomass gasification and solid oxide fuel cells (SOFCs) offer significant potentials, also regarding important co-benefits, such as security of energy supply as well as emission reductions in terms of greenhouse gases or air pollutants. Besides emission or air quality regulations, the development of CHP technologies for clean on-site small-scale power generation is also strongly incentivised by energy efficiency policies for residential appliances, such as e.g. Ecodesign and Energy Labelling in the European Union (EU). Furthermore, solid residual biomass as renewable local energy source is best suited for decentralised operations such as micro-grids, also to reduce long-haul fuel transports. By this means such distributed energy resource technology can become an essential part of a forward-looking strategy for net zero energy or even smart plus energy buildings. In this context, this paper presents preliminary impact assessment results and most recent environmental considerations from the EU Horizon 2020 project "FlexiFuel-SOFC" (Grant Agreement no. 641229), which aims at the development of a novel CHP system, consisting of a fuel flexible smallscale fixed-bed updraft gasifier technology, a compact gas cleaning concept and an SOFC for electricity generation. Besides sole system efficiencies, in particular resource and emission aspects of solid fuel combustion and net electricity effects need to be considered. The latter means that vastly less emission intensive gasifier-fuel cell CHP technologies cause significant less fuel related emissions than traditional heating systems, an effect which is further strengthened by avoided emissions from more emission intensive traditional grid electricity generation. As promising result, operation "net" emissions of such on-site generation installations may be virtually zero or even negative. Additionally, this paper scopes central regulatory instruments for small-scale CHP systems in the EU to discuss ways to improve the framework for system deployment

An analysis of open market share repurchases : timing, market impact, and returns

USA ; Aktienrückkauf ; Zeit ; Börsenkurs ; Markteffizienz ; Kapitalmarkteffizien

An analysis of open market share repurchases : timing, market impact, and returns

USA ; Aktienrückkauf ; Zeit ; Börsenkurs ; Markteffizienz ; Kapitalmarkteffizien

Actual share repurchases, price efficiency, and the information content of stock prices

We examine the impact of actual share repurchases on stock prices using several measures of price efficiency and manually collected data on U.S. repurchases. We find that share repurchases make prices more efficient and reduce idiosyncratic risk. Further analyses reveal that the effects are primarily driven by repurchases in down markets. We conclude that share repurchases help to maintain accurate stock prices by providing price support at fundamental values. We find no evidence that managers use share repurchases to manipulate stock prices when selling their equity holdings or exercising stock options

Private equity and human capital risk

We study the impact of leveraged buyouts in Germany on employees’ wages, employment, and career paths. We contrast different views of buyouts, which see LBOs as facilitators of organizational and technological modernization, or as vehicles for transferring wealth from employees to shareholders. We conduct matched-sample difference-in-fifferences estimations with more than 147,000 LBO employees and a carefully matched control group. LBOs increase annual income in the short term, but reduce income by about 11% in the long term. White-collar workers and middle management lose most, probably because of organizational streamlining. LBOs in our sample do not foster trends related to technological modernization such as skill-biased technological change or job polarization. We find a strong negative impact of LBOs for older employees, but no support for the notion that shareholders benefit from LBOs by forcing employees to accept lower wages. All human capital impairments are borne by employees who leave the firm and become unemployed or employed in a different industry