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

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

Research output: Contribution to journalArticlepeer-review

31 Scopus citations

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.

Original languageEnglish (US)
Pages (from-to)267-290
Number of pages24
JournalJournal of Accounting and Economics
Volume56
Issue number2-3
DOIs
StatePublished - Nov 2013

Keywords

  • Corporate governance
  • Internal controls
  • Regulation
  • Sarbanes-Oxley
  • Section 404

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics

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