We investigate going-private decisions in response to the passage of the Sarbanes–Oxley Act of
2002 (SOX). We study firms that go private from 1998 to May 2005 and find: (1) the quarterly
frequency of going-private transactions has increased after the passage of SOX, and (2) abnormal
returns surrounding both the passage of SOX and the going-private announcement are significantly
related to proxies for the costs and benefits of SOX and the net benefits of being a public firm.
Our empirical evidence is broadly consistent with the notion that SOX has affected firms’
going-private decisions.