The Impact of the Sarbanes-Oxley Act on the Cost of Going Public

This paper examines the impact of the Sarbanes-Oxley Act (SOX), a legal framework intended to increase transparency and accountability of listed companies, on the cost of going public in the US. We expect SOX to increase the direct cost of going public, but decrease the underpricing because of reduced asymmetric information. Our main results corroborate these hypotheses. First, we find an increase in the cost of going public of 90 bp of gross proceeds. Second, we record a reduction in underpricing of 6 pp, which is related to a reduced offer price adjustment. This supports our hypothesis that SOX represents a mechanism to reduce asymmetric information.

Who has really paid for the Reconstruction of East Germany? Expected and Realized Returns on Real Estate Investments in East and West Germany in the 1990s

We evaluate the profitability of investments in residential property in Germany after unification with a focus on the comparison of East and West Germany. Calculations are carried out for (1) the after-tax return an investor might have expected at the beginning of the 1990s, and (2) the after-tax return that has been realized ten years after. We compare a set of statistical data for investments in fifty major cities by using complete financial budgeting. The results show that tax subsidies could not always protect investors from losing money, but they have boosted realized returns after tax considerably. Therefore, it was indeed the taxpayers, not the investors, who have borne the cost of reconstructing East Germany.

Global Standards: Recent Developments betweend the Poles of Privacy and Cloud Computing

The development of the Internet has made it possible to transfer data ‘around the globe at the click of a mouse’. Especially fresh business models such as cloud computing, the newest driver to illustrate the speed and breadth of the online environment, allow this data to be processed across national borders on a routine basis. A number of factors cause the Internet to blur the lines between public and private space: Firstly, globalization and the outsourcing of economic actors entrain an ever-growing exchange of personal data. Secondly, the security pressure in the name of the legitimate fight against terrorism opens the access to a significant amount of data for an increasing number of public authorities.And finally,the tools of the digital society accompany everyone at each stage of life by leaving permanent individual and borderless traces in both space and time. Therefore, calls from both the public and private sectors for an international legal framework for privacy and data protection have become louder. Companies such as Google and Facebook have also come under continuous pressure from governments and citizens to reform the use of data. Thus, Google was not alone in calling for the creation of ‘global privacystandards’. Efforts are underway to review established privacy foundation documents. There are similar efforts to look at standards in global approaches to privacy and data protection. The last remarkable steps were the Montreux Declaration, in which the privacycommissioners appealed to the United Nations ‘to prepare a binding legal instrument which clearly sets out in detail the rights to data protection and privacy as enforceable human rights’. This appeal was repeated in 2008 at the 30thinternational conference held in Strasbourg, at the 31stconference 2009 in Madrid and in 2010 at the 32ndconference in Jerusalem. In a globalized world, free data flow has become an everyday need. Thus, the aim of global harmonization should be that it doesn’t make any difference for data users or data subjects whether data processing takes place in one or in several countries. Concern has been expressed that data users might seek to avoid privacy controls by moving their operations to countries which have lower standards in their privacy laws or no such laws at all. To control that risk, some countries have implemented special controls into their domestic law. Again, such controls may interfere with the need for free international data flow. A formula has to be found to make sure that privacy at the international level does not prejudice this principle.