Wednesday, May 17, 2006 In The Sarbanes-Oxley Debacle: What We've Learned; How to Fix It (AEI Press, 2006), Henry N. Butler and Larry E. Ribstein argue that the Sarbanes-Oxley Act of 2002 (SOX) has been a colossal failure. Enacted after the collapse of the Enron Corporation, the authors argue that Congress panicked and rushed into passing legislation that has had huge direct and indirect costs to the firms which must comply with the reporting rules.Butler and Ribstein write, "SOX's attempt to create a perfect world with zero fraud goes too far. Moreover, it is well-accepted in the financial economics literature that the costs and benefits of securities regulation should be evaluated from the perspective of the typical shareholders who can avoid some costs of fraud by investing in diversified portfolios of shares. By imposing the costs of eliminating fraud on all firms in investors' portfolios, the SOX mandates are a terrible deal for the ordinary investors it purports to protect." The Sarbanes-Oxley Debacle Previous articles Impact of Sarbanes-Oxley on Supply Chain Managemen...
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