Economic effects of SOX Section 404 compliance: A corporate insider perspective

Cindy R. Alexander, Scott W. Bauguess, Gennaro Bernile, Yoon-Ho Alex Lee and Jennifer Marietta-Westberg

Journal of Accounting and Economics, 2013, vol. 56, issue 2, 267-290

Abstract: We use survey responses from 2,901 corporate insiders to assess the costs and benefits of compliance with Section 404 of the Sarbanes-Oxley Act. The majority of respondents recognize compliance benefits, but they do not perceive these benefits to outweigh the costs, on average. This is particularly true among smaller companies where the start-up costs are proportionately larger. However, the perceived efficiency of compliance increases with auditor attestations, years of compliance experience, and after the remediation of a material weakness. Notably, the perceived effects of compliance depend largely on firm complexity, but are mostly unrelated to firm governance structure.

Keywords: Corporate governance; Internal controls; Regulation; Sarbanes-Oxley; Section 404 (search for similar items in EconPapers)
JEL-codes: G18 G38 K22 M49 (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (22)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jaecon:v:56:y:2013:i:2:p:267-290

DOI: 10.1016/j.jacceco.2013.09.002

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