Who Are The Losers In SEC's SarbOx Rule Change?

from the sorting-it-out dept

Over the years, there have been a lot of complaints about the high cost of Sarbanes-Oxley compliance, although some have argued that these costs have tapered off as companies have gotten used to the requirements. Still, many are relieved about a new SEC decision to ease audit requirements, which should have the effect of reducing compliance costs. Not all companies may be enthusiastic, however. Offering tools and services to aide in compliance has itself become a big business, particularly for a number of software firms. Some are now wondering, then, whether easing the regulations will result in a serious hit to profits at these companies. One analyst believes that the rule change could result in a 7% hit to US IT spending, which comes at a time when there's already concern about corporate tech spending. Of course, the fact that there may be some losers from the rule change doesn't mean that the rule change is a bad thing. To the contrary, money spent just to be in compliance with some regulation is pretty much a deadweight loss to the economy. Furthermore, while IT vendors may see a short-term hit on account of the rule change, they should benefit from a less risk-averse climate and customers with more money to spend on productive investments.

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    Steve R. (profile), 24 May 2007 @ 12:35pm

    Unfortunately, I do not have any hands-on experience with Sarbanes-Oxley. However, this discussion fits the normal pattern of corporate whining that ANY regulation is too expensive. While complying with regulations may be "expensive", corporations don't seem to have any problem with finding money to provide executives with multi-million dollar pay packages or arranging guaranteed capital gains for their executives by back-dating options. If corporations don't want onerous regulation, why not be ethical to begin with?

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