What has compliance with SOX cost publicly held corporations?
In 2004, Foley & Lardner found that, for publicly held companies with revenues under $1 billion, the average continuing annual costs of being public more than doubled from $1.3 to $2.9 million. Of the 115 companies responding to the survey, 21 percent were considering going private, 6 percent were considering selling and 7 percent were considering merging, all because of the cost of SOX compliance. In a Ph.D. dissertation by Ivy Xiying Zhang (Economic Consequences of the Sarbanes-Oxley Act of 2002), the author concludes ‘the loss in market value around the most significant SOX rulemaking events amounts to $1.4 trillion, which likely reflects direct compliance costs, indirect costs and expected costs of future anti-business legislation.’ Have the costs of compliance hurt the country in unintended ways? It seems clear to me that the country has been hurt by SOX. The loss of market value of securities aside, many believe that capital market innovation, long a strength of the American econ
