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

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

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    Bibliographic Info

    Article provided by Elsevier in its journal Journal of Accounting and Economics.

    Volume (Year): 56 (2013)
    Issue (Month): 2 ()
    Pages: 267-290

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    Handle: RePEc:eee:jaecon:v:56:y:2013:i:2:p:267-290

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    Web page: http://www.elsevier.com/locate/jae

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    Keywords: Corporate governance; Internal controls; Regulation; Sarbanes-Oxley; Section 404;

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