| Summary: | The purpose of this article is to study the relationship between the adoption of the Sarbanes-Oxley Act (SOX) and the compensation of the board of directors of Canadian companies listed on US stock markets. The SOX act, promulgated on 30 July 2002 and the rules adopted by the Securities and Exchange Commission (SEC) require, among furthermore, a majority of independent directors on boards. The literature focuses on two main differences between US companies and Canadian companies: more concentrated ownership and the smaller market capitalization of Canadian companies. Therefore, a consistent application of SOX on all the companies that differ at the base, in their size and structure, may have a different impact on the costs of compliance. Using a sample of 17 Canadian companies listed on US stock exchanges from 2001 to 2004, our analysis show that there is a link between the adoption of SOX and the increased in the cash compensation of the board of directors. The results also show that the effect of SOX is different depending on the company’s size.
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