Sample Term Paper

The issues that are presented to the business world as a result of the Sarbanes Oxley Act pertain to the high costs of implementing the SAO regulations and guidelines which cause excessive burden on the funds and profit margins of companies in the public sector.

The costs of compliance with the Sarbanes Oxley Act are complex and exhaustive. The majority of the burden regarding these costs is felt by the smaller public sector businesses and companies. “The negative effect among small firms is consistent with these marginal companies being less able to absorb the incremental costs associated with SOX compliance. The screening of smaller firms with weaker governance attributes fromU.S.exchanges is consistent with the heightened governance costs imposed by SOX increasing the bonding-related benefits of aU.S.listing.” (Piotroski & Srinivasan, 2008)

Aside from this the companies also have an incentive to avoid the Sarbanes Oxley Act as it presents complex compliance regulations which are often very tenuous for the smaller firms in the public sector to comply with. “There has been a lot of SOX and other compliance-related fear, uncertainty, and doubt (FUD) generated by solution providers and consultants that has negatively affected the reputation of trusted advisers as a whole, according to Evan Tegethoff, director of compliance services at Denver-based solution provider Accuvant” (‘Lights Dimming on the Sarbanes-Oxley Act?’)


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