Abstract
We use survey responses from 2,901 corporate insiders to assess the costs and benefits of compliance with Section 404 of the Sarbanes-Oxley Act. The majority of respondents recognize compliance benefits, but they do not perceive these benefits to outweigh the costs, on average. This is particularly true among smaller companies where the start-up costs are proportionately larger. However, the perceived efficiency of compliance increases with auditor attestations, years of compliance experience, and after the remediation of a material weakness. Notably, the perceived effects of compliance depend largely on firm complexity, but are mostly unrelated to firm governance structure.
Disciplines
Corporation and Enterprise Law | Law | Law and Economics | Securities Law
Date of this Version
9-23-2013
Recommended Citation
Cindy R. Alexander, Scott W. Bauguess, Gennart Bernile, Yoon-Ho Alex Lee, and Jennifer Marietta-Westberg, "Economic effects of SOX Section 404 compliance: A corporate insider perspective" (September 2013). University of Southern California Law and Economics Working Paper Series. Working Paper 173.
http://law.bepress.com/usclwps-lewps/173
Included in
Corporation and Enterprise Law Commons, Law and Economics Commons, Securities Law Commons