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Unintended Consequences Of Sarbanes-Oxley

Unintended Consequences Of Sarbanes-Oxley

by Rick Turoczy on September 18, 2006

The greatest cost of Sarbanes-Oxley is derived from the law of unintended consequences. Nonprofit organizations, foreign-registered corporations, and others that are not directly covered by the new law worry that they are caught in the web of Sarbanes-Oxley. A law aimed at reinforcing faith in American financial securities has ensnared many entities not involved in those securities.

All of these costs might plausibly be worthwhile if investors and corporations had increased confidence in securities traded in American markets. Positive signs for the law would include increased registration of international corporations and their securities in America, a shift from private equity to public equity, and a shift from private debt to public debt.

We find just the opposite.

Unintended Consequences Of Sarbanes-Oxley

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