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To regulate, or not? July 30th marks the ten years anniversary of Sarbanes-Oxley. Given a ten year retrospective, one would think that there would be some sort of general agreement about whether the law has been successful or not. But that’s not the case. The debate over the costs and efficacy of Sarbanes-Oxley have persisted over the last ten years and continue today.
The arguments continue on both sides. It’s a balance between limiting fraud in companies versus the costs of implementing and maintaining compliance with the law. Some argue that the law makes it difficult for some companies to go public and ultimately limits the creation of jobs. But continuing scandals in the financial world cause some to argue that even tighter regulations are necessary.
Here are some comments heard in this debate:
Michael Gallagher, chairman of the Professional Practice Executive Committee of the Center for Audit Quality, said that “The benefits of Sarbanes-Oxley are substantial. And in my view, it serves capital markets and investors well… The benefit is to the cost of capital because of that assurance and that higher level of rigor from that internal control.”