Sarbanes-Oxley: Does the Cost Knock Your Socks Off?

Martin, John A.; Combs, James G.
August 2010
Academy of Management Perspectives;Aug2010, Vol. 24 Issue 3, p103
Academic Journal
The article reports on a study which investigated the indirect costs of the U.S. Sarbanes-Oxley Act (SOX), which was designed to increase corporate accounting transparency. The study, "How costly is the Sarbanes-Oxley Act? Evidence on the effects of the act on corporate profitability," by Anwer Ahmed, Mary Lea McAnally, Stephanie Rasmussen, and Connie Weaver, was published in the "Journal of Corporate Finance." It found that implementation of SOX increased cash flow at firms where it caused accounting irregularities to be uncovered, while lowering cash flow in general.


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