To Be or Not To Be Public: The Impact

We examine firms that go completely private for the years 1999-2005 which surround the Sarbanes-Oxley (SOX) Act. Firms are more likely to go private when they have high levels of CEO ownership, even more so after SOX. Firms are also more likely to go private when they are smaller, out of favor with the market, have poor stock market performance and liquidity, and have greater institutional ownership post-SOX. The valuation effects from going private are mixed in the post-SOX period. Smaller firms experience significantly larger valuation effects after SOX. Those firms that are out-of-favor with the market, and cite the cost of being public experience more favorable valuation effects when going private between the inception of SOX and 2003, but not in a later period.