Another set of predictions commonly advanced by critics of SOX is that it would increase the
marginal cost of being a U.S.-registered public company more than the benefits of that status,
causing existing public firms to go private or go dark, and deterring other companies from going
public or cross-listing in the U.S. A substantial number of studies have attempted to test these
predictions by looking at firm behavior before and after SOX’s passage. The going-dark,
going-private and cross-listing studies produce similar results—smaller, less liquid and more
fraud-prone firms did indeed exit U.S. stock markets after SOX—but the evidence that SOX
reduced the number of IPOs is weak at best, and is offset by evidence that IPO pricing improved.
More generally, the design of these studies is such that the relevance of their findings to an
assessment of SOX remains unclear, as changes in the number of public companies can only be
evaluated together with the propensity of those companies to commit fraud and the costs of such
fraud.