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Mexican Corporations Entering And Leaving U.S. Markets: An Impact Of The Sarbanes-Oxley Act Of 2002?
Connecticut Journal of International Law, Vol. 23, p. 281 (2008)
  • Eugenio J. Cárdenas, Stanford Law School

What has led to the dramatic decline of cross-listing in U.S. markets since 2002? A significant number of foreign issuers have delisted their American Depositary Receipts from the New York Stock Exchange, accompanied by an impressive plunge in the level of additions, among other shocking facts. It is notable that this trend followed the enactment of the Sarbanes-Oxley Act of 2002, considered to be an excessive and rushed political response by Congress to the 2001 Enron and Worldcom scandals, aimed at restoring confidence.

Taking into account that in the company delisting tendency, the Mexican case was the most pronounced, yielding the highest number of withdrawals, this paper sets out to determine whether the departure of considerable numbers of Mexican Corporations from U.S. markets in the last five years may in fact be attributed to Sarbanes-Oxley and, if so, for what motives. The investigation states as a hypothesis that even though there may be a combination of factors deterring cross listing, it is in the end Sarbanes-Oxley, particularly through the costs of compliance with Section 404 related to the certification of internal controls, which constitutes the determinant element in the cost-benefit analysis that firms conduct when considering cross listing in U.S. markets. This, is tested through the Mexican example.

  • Sarbanes Oxley Act,
  • 404,
  • internal controls,
  • cross listing,
  • corporate governance,
  • bonding,
  • functional convergence,
  • enforcement,
  • delisting,
  • market premium,
  • Mexico,
  • Mexican,
  • firms,
  • U.S. markets,
  • New York Stock Exchange,
  • trading volume,
  • liquidity,
  • shareholders,
  • managers,
  • directors,
  • U.S. GAAP,
  • Enron,
  • WorldCom
Publication Date
Spring 2008
Citation Information
Eugenio J. Cardenas, Mexican Corporations Entering and Leaving U.S. Markets: An Impact of the Sarbanes-Oxley Act of 2002?, 23 Conn. J. Int'l L. 281 (2008)