Impact of Canadian SOX from an Acquisition Perspective
35 Pages Posted: 26 Nov 2012
Date Written: August 2, 2011
We examine the effects of Ontario Bill-198 (CSOX-2003), the strictest corporate law in Canada. Despite some drawbacks, we find the Act has added significant value contrary to many practitioners’ beliefs. Using a large sample of Canadian tender offers between 1996 and 2009, we find that both target and acquirer shareholders experience higher abnormal returns closer to announcement dates in the post CSOX period. Using industry adjusted portfolio, we also find that the long term post-acquisition operating performances for the acquiring firms have significantly improved in the post-Act period. Overall, our results suggest that CSOX has an incremental positive impact on Canadian acquisition activity.
Keywords: Regulations, CSOX, Bill 198, Insider trades, Merger and Acquisition
JEL Classification: G14, G30, G34, G38
Suggested Citation: Suggested Citation