SOX… life, death or transformation for small firms

Greg Tondi and Joseph Riotto

International Journal of Critical Accounting, 2011, vol. 3, issue 1, 107-113

Abstract: The costs of the Sarbanes-Oxley Act of 2002 have been tremendous on small firms. Will there be life, death or transformation for the firm? Although SOX has addressed the concerns relating to the financial scandals of Enron and WorldCom and somewhat restored investor confidence, the financial costs of doing so cannot be ignored. Of the Act, Section 404, effectiveness of internal controls over financial reporting, has been the largest cost burden on small firms. Large companies are better able to absorb the costs and have the necessary resources to comply as opposed to small firms. As a result of the high costs, some small firms have opted to go private, sell their company, or merge with another company. A new auditing standard was introduced recently to help make compliance less complex, and therefore, reduce costs.

Keywords: Sarbanes-Oxley Act; SOX; corporate governance; costs; small firms; internal controls; financial reporting; auditing standards. (search for similar items in EconPapers)
Date: 2011
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.inderscience.com/link.php?id=39608 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ids:ijcrac:v:3:y:2011:i:1:p:107-113

Access Statistics for this article

More articles in International Journal of Critical Accounting from Inderscience Enterprises Ltd
Bibliographic data for series maintained by Sarah Parker ().