This paper provides evidence about the unintended consequences arising when small companies are exempted from costly regulations - these firms have incentives to stay small. Between 2003 and 2008, the SEC postponed compliance with Section 404 of the Sarbanes-Oxley Act of 2002 (SOX) for...

Economists have long recognized that government regulations often generate unintended consequences.1 The initial Securities Act of 1933 and the Securities Exchange Act of 1934 exempted small firms from certain filing requirements. The SEC expanded these exemptions in implementing the Sarbanes...

Economics challenge the specification of discretionary accrual models. Because rent-seeking firms pursue differentiated business strategies, firms in the same industry experience idiosyncratic shocks due to heterogeneous economic fundamentals and hence have different accrual generating...

We document that CEO cash compensation is twice as sensitive to negative stock returns as it is to positive stock returns. Since stock returns include both unrealized gains and unrealized losses, we expect cash compensation to be less sensitive to stock returns when returns contain unrealized...

We document that CEO cash compensation is twice as sensitive to negative stock returns as it is to positive stock returns. Since stock returns include both unrealized gains and unrealized losses, we expect cash compensation to be less sensitive to stock returns when returns contain unrealized...