Question

Sarbanes–Oxley. In response to the Sarbanes–Oxley Act, many small firms in the United States have opted to “go dark” and delist their stock. Why might a company choose this route? What are the costs of “going dark”?  

Answer 1

In response to the sarbanes oxley act, various small firms has decided to go dark because going dark will be saving them from a lot of cost of compliances. The cost of compliance of Sarbanes oxley act has been very high and it was reducing the profits of these companies.

Major cost which are associated with going dark will be related to lesser access to the capital because when the company have delisted its shares, it will have lesser access to the capital markets and it will be getting the debt capital at a higher cost, so the cost of capital will also increase for this company and they will also have a lower access to the capital.