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    SOX after Ten Years: A Multidisciplinary Review.
    research summary posted July 21, 2015 by Jennifer M Mueller-Phillips, tagged 01.0 Standard Setting, 01.05 Impact of SOX 
    SOX after Ten Years: A Multidisciplinary Review.
    Practical Implications:

    For researchers, the challenges are to develop methods that better specify and estimate the Act’s potential benefits, as well as its indirect costs. For policy-makers, the challenges are how to better design future regulatory (or de- or re-regulatory) interventions so as to permit more reliable inferences about their effects, to improve the quality of information about whether they have led to net benefits, and to reduce the risk that pure politics, untethered by fact or reason, will continue to generate unnecessarily costly oscillation in systemically important laws, regulations, and institutions that form the foundations of capitalism. These tasks are all the more important given ongoing efforts to legally mandate quantified cost-benefit analysis of financial regulation, which the findings here suggest remains aspirational, rather than feasible.


    Coates, J. C., & Srinivasan, S. 2014. SOX after Ten Years: A Multidisciplinary Review. Accounting Horizons 28 (3): 627-671.

    audit, cost benefit analysis, PCAOB, regulation, Sarbanes-Oxley, SEC
    Purpose of the Study:

    The authors review and assess over 120 studies of the Sarbanes-Oxley Act. They describe major developments in its legal, regulatory, and institutional implementation; its effects on U.S. corporate law, disclosure practices, and other countries’ laws; and the propensity of companies to go or remain public in the U.S. The authors also note a puzzle regarding the Act’s reception in public debate. 

    Design/Method/ Approach:

    The authors review and assess research findings from more than 120 papers in accounting, finance, and law to evaluate the impact of the Sarbanes-Oxley Act after 2005. The authors sketch a research agenda in light of the literature review and assessment.


    On the one hand, the Sarbanes-Oxley continues to be fiercely and relentlessly attacked in the U.S., particularly in political election battles and during legislative debates, reflected in part in provisions of the Dodd-Frank Act and the JOBS Act, which can be seen as a partial legislative rollback of the Act. On the other hand, the authors discuss survey evidence that suggests that informed observers, including corporate officers and investors, do not believe that the Actas implemented, taking into account significant relaxations of its most criticized provision (section 404[b] internal control attestation)has been a significant problem, and may well have produced net benefits, and the law has been copied at least in part by other countries.

    The authors suggest that the puzzle of the Act’s reception may be explained in part by the inconclusive state of research on its costs and benefits, and so follows a two-part pattern that may be generalized to most types of regulation in the spheres of financial institutions, markets, and corporate governance. Firstas with most types of regulationthe Act had clear, non-trivial, and quantifiable direct costs. Second, the tasks of estimating either the benefits or the indirect costs of the Act are at least an order of magnitude more difficult than the task of estimating direct costs, and are possibly beyond the present capacity of researchers to achieve with much precision.

    Standard Setting
    Impact of SOX