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Compliance causes little harm to firms

Compliance causes little harm to firms

by Rick Turoczy on December 12, 2004

With reference to Terry Murden’s article on the cost of complying with Sarbanes-Oxley (Comment, November 28) a Booz Allen Hamilton study has revealed that compliance-related incidents are not a major cause of shareholder value destruction.

The study of 1,200 firms found that although companies are focused on compliance, more shareholder value has been destroyed in the past five years as a result of strategic mismanagement and poor execution than was lost in all of the recent compliance scandals combined.

It showed the causes of shareholder value destruction to be 13% compliance failures, 60% strategic mistakes (for example: misjudging demand, competitive pressure, management ineffectiveness) and 27% operational blunders (for example: cost overruns, poorly managed integration during mergers and acquisitions).

Compliance causes little harm to firms

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