Sarbanes-Oxley was passed in 2002, after the Enron and WorldCom disasters. Like all legislation by Congress, written and executed as a reaction to a media-enhanced investor-debacle, the law of unintended consequences is the ultimate result. The negatives far outweigh the positives in such instances.
Sarbanes-Oxley has been a great profit center for accounting firms. It’s also a good talking and campaigning point for populist politicians. It’s, nevertheless, an expensive headache for companies.
Lots of smaller companies no longer seek public funds. That’s because it has become too expensive for them to be publicly owned.
That is because audits are too expensive. What is more, the legislation helps little in preventing fraud in all types of companies, the intended purpose. That does special havoc with small business which cannot afford the added, expensive bookkeeping.
Moreover, all this keeps new foreign corporations, even giants, out of the U.S. or has existing ones reconsider their American status.
If any corporate executive wants to commit fraud, Sarbanes-Oxley will not prevent the collusion to do so. On the other hand, anyone with corporate experience (that leaves out most in Congress) knows that Sarbanes-Oxley places impediments that makes running a business more like a steeplechase or handicap than it should be.
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