SOX, corporate transparency, and the cost of debt

• Main Authors: Andrade, Sandro, BERNILE, Gennaro, Hood, Frederick
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2014
• Subjects: Sarbanes-Oxley; Corporate transparency; CDS pricing; Finance and Financial Management
• Online Access: https://ink.library.smu.edu.sg/lkcsb_research/3660; https://ink.library.smu.edu.sg/context/lkcsb_research/article/4659/viewcontent/SSRN_id1257002.pdf
• Institution: Singapore Management University

We investigate the impact of the Sarbanes–Oxley (SOX) Act on the cost of debt through its effect on the reliability of financial reporting. Using Credit Default Swap (CDS) spreads and a structural CDS pricing model, we calibrate a firm-level corporate opacity parameter in the pre- and post-SOX perio...