Discussion of 'Unintended Consequences of Granting Small Firms Exemptions from Securities Regulation : Evidence from the Sarbanes-Oxley Act'

(GWZ) examine a potential unintended consequence of the SEC's use of bright-line thresholds for compliance with reporting regulations. In particular, the authors consider whether the SEC's postponement of compliance with Section 404 of the Sarbanes-Oxley Act (SOX) for “non-accelerated filers” (firms with a public float of less than $75 million) provided firms with an incentive to stay small. The authors find that non-accelerated filers are more likely to remain below the $75 million threshold than are accelerated filers. They also investigate a variety of actions that non-accelerated filers might take in order to keep their public float below $75 million