Changes
Jump to navigation
Jump to search
Regulations in Relation to Small Businesses (view source)
Revision as of 16:32, 10 February 2016
, 16:32, 10 February 2016→Complexity Costs Money
'''Sarbanes-Oxley''', a law aimed at preventing Enron-style frauds, has made it so difficult to list shares on an American stock market that firms increasingly look elsewhere or stay private. America's share of initial public offerings fell from 67% in 2002 (when Sarbox passed) to 16% last year, despite some benign tweaks to the law. A study for the Small Business Administration, a government body, found that regulations in general add $10,585 in costs per employee. It's a wonder the jobless rate isn't even higher than it is. [http://www.economist.com/node/21547789 Economist]
More on '''Sarbanes-Oxley Act'''from a [http://www.forbes.com/sites/hbsworkingknowledge/2014/03/10/the-costs-and-benefits-of-sarbanes-oxley/#3c08e14f2776 Forbes] article
"Widely deemed the most important piece of security legislation since formation of the Securities and Exchange Commission in 1934, the landmark Sarbanes-Oxley Act of 2002 was born into a climate still reeling from the burst of the high-tech bubble and fraud scandals at Enron and WorldCom.
Its intent was to improve corporate governance and restore the faith of investors, but many in the business world spoke out against SOX, viewing it as a politically motivated over-correction that would lead to a loss of risk-taking and competitiveness." [http:/ "'We took a cost/wwwbenefit approach when considering SOX,' explains Srinivasan.forbesThe most worrisome part of the act on the business side was the mandate that required public companies to obtain an independent audit of their internal control practices.com/sites/hbsworkingknowledge/2014/03/10/The cost of this requirement, he says, was felt most acutely by smaller companies, although it was ultimately deferred for companies with market caps of less than $75 million and made permanent in theDodd-Frank Act. Audit standards also were modified in 2007, a change that reportedly reduced costs-for many firms by 25 percent or more per year." However, the SOX act has some key takeaways, when considering regulation. For instance, flexibility with crafting regulations: "'That aspect of flexibility—being able to exempt some smaller companies from the mandate and-benefits-make it easier for others to implement—is an important quality to keep in mind when we discuss future regulation,' says Srinivasan, who also cites the important role of the Public Company Accounting Oversight Board (PCAOB), a nonprofit private corporation created by SOX that oversees auditors ofSEC-sarbanes-oxley/#3c08e14f2776 Forbes]registered companies"
===Ways to Reform Regulation===
