THE EFFECTS OF SARBANES-OXLEY ACT ON UNDERWRITING FEES FOR SEASONED EQUITY OFFERINGS BY CANADIAN CROSS-LISTED FIRMS

Arturo Rubalcava
University of Regina
ABSTRACT
This study explores the impact that the Sarbanes-Oxley Act of 2002(SOX) has had on the
underwriting fees of seasoned equity offerings by Canadian cross-listed firms. It finds that the
underwriting fees did not change significantly from the pre- to the post-SOX time periods (4.68%
vs. 4.72%). However, when differentiated by U.S. cross-listing venue, the underwriting fees of
cross-listed issuers on the NASDAQ (NYSE/AMEX) significantly decreased (increased) after the
passage of the SOX. On the other hand, most determinants of underwriting fees differ between the
pre- and post-SOX time periods, except beta risk and gross proceeds, which are common in both
periods and consistent with the literature on the impact on beta risk and economies of scale of
gross proceeds on underwriting fees. Also, an interesting finding is that the underwriting fees are
positively associated to determinants that proxy for earnings uncertainty, information asymmetry,
financial risk, and price risk after the passage of SOX only.