Economic effects of SOX Section 404 compliance: A corporate insider perspective

Economic effects of SOX Section 404 compliance: A corporate insider perspective

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...

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Bibliographic Details
Main Authors: Alexander, Cindy, Bauguess, Scott, BERNILE, Gennaro, Lee, Alex, Marietta-Westberg, Jennifer
Format: text
Language:English
Published: Institutional Knowledge at Singapore Management University 2013
Subjects:
Corporate governance
Internal controls
Regulation
Sarbanes-Oxley
Section 404
Accounting
Finance and Financial Management
Online Access:https://ink.library.smu.edu.sg/lkcsb_research/3661
https://ink.library.smu.edu.sg/context/lkcsb_research/article/4660/viewcontent/EconomicEffictsSOX_4004_av.pdf
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Institution: Singapore Management University
Language: English
Description
Summary: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.

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