CFOs agreed that SOX had increased investor
Markets Have Benefitted Despite high initial costs of the internal control mandate evidence shows that it has proved beneficial. Markets have been able to use the information to assess companies more effectively managers have improved internal processes and the internal control testing has become more cost effective over time according to Srinivasan. The research does not support the fear that.SOX would reduce levels of risk taking and investment in research and growth. Another concern that the act would shrink the number of IPOs has not been borne out either in fact the pricing of IPOs post SOX became less uncertain. The cost of being a publicly traded company did cause some firms to go private but research shows these were primarily organizations Chinese Overseas America Number Data that were smaller less liquid and more fraud prone. Yes SOX may have cut off public market financing to these companies but the question is whether it was appropriate for them to be in public markets in the first place Srinivasan says. That is a value judgment to be sure. But it may not be a bad thing if certain companies are restricted in their access to financing simply because loss of trust in public capital markets has big consequences for the entire economy.
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A survey by the Financial Executives Research Foundation found that percent of large companyconfidence with percent agreeing that it had reduced fraud. And yet—the financial crisis of still happened. The big unanswered question is whether SOX related changes had any impact in the lead up to the financial crisis. Did it make things better or worse says Srinivasan. We don t know the answer to that. We only know that there were benefits in terms of financial reporting and corporate governance that costs of implementation were higher for smaller companies and that concerns about risk taking and investment haven t come to bear.
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