Sarbanes-Oxley and the Evolution of State Takeover Laws: A Study of Opt-in and Opt-out Provisions Over Time
Sarbanes-Oxley and the Evolution of State Takeover Laws: A Study of Opt-in and Opt-out Provisions Over Time

Summary/Abstract: In this research, we examine the immediate and long-term implications of the Sarbanes-Oxley Act (SOX) on the provisions of state takeover laws. We gather the information from the 1998–2006 IRRC corporate governance database and split it into three time periods: pre–SOX (1998–2000), post–SOX (2002–2004), and long–SOX (2006). We find that while there were some notable changes in the states' addition of opt-in and opt-out options for some of these laws, there were no significant changes in the way these laws were applied between the pre-SOX and post-SOX periods. Additionally, we discover that SOX had no significant further effect on either the laws themselves or their opt-in and opt-out clauses beyond 2004. Our findings suggest that states granted the companies extra latitude regarding some takeover defense clauses shortly after the SOX legislation went into effect.

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