Two working papers were recently released on SSRN which seek to assess the impact of the Sarbanes-Oxley Act on smaller firms. Both papers conclude that more study is needed.
Ehud Kamar, Pinar Karaca-Mandic and Eric Talley have posted Sarbanes-Oxley’s Effects on Small Firms: What is the Evidence? The paper reviews a number of studies on the impact of Sarbanes Oxley on smaller firms. The authors conclude that prior studies lend support to the propostion that Sarbanes-Oxley had a disproportionate impact on smaller firms, but the evidence is not conclusive.
Christian Leuz has posted Was the Sarbanes-Oxley Act of 2002 Really this Costly? A Discussion of Evidence from Event Returns and Going-Private Decisions. Leuz disputes the conclusions of several studies finding increased net costs for Sarbanes-Oxley. He argues that several of these studies’ key findings may not be attributable to Sarbanes-Oxley, but may instead reflect broader market trends. Leuz concludes we do not have much SOX-related evidence that one-size-fits-all regulation imposes significant costs on firms, and that there is evidence that Sarbanes-Oxley has increased the scrutiny on firms and produced certain benefits.