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Friday, April 29, 2005
Worthwhile legislation
the Sarbanes-Oxley Act has proven costly to public companies and has reduced their willingness to take risks, the legislation was necessary to maintain the perception of fairness in America’s equity markets, according to Raj Aggarwal, Kent State University’s chair of corporate finance.
The act, passed by Congress in 2002 in the wake of corporate accounting scandals at Enron and Worldcom, will cost businesses about $4.4 million on average this year, Dr. Aggarwal said today at a meeting of the Cleveland chapter of the CFA Society, a group that promotes ethical practices among financial analysts.
That figure applies to companies with about $5 billion in annual sales. He said the cost probably would go down by as much as 25% next year and in subsequent years as companies gain familiarity with the act’s requirements.
After the value of many people’s pensions crashed from holding stocks like Enron, “Congress had to do something,” Dr. Aggarwal said. However, “Congress is not the most informed decision maker when it comes to regulating business,” he said.
posted by Anonymous @ 2:57 PM
 
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