A new academic study claims to have arrived at a numeric computation of the cost and benefit of exempting smaller companies from Sarbanes-Oxley internal control auditing — and it suggests investors are not necessarily better off for the exemption.
Academics at the University of Washington and Georgetown University say smaller companies that are exempt from Section 404(b) of Sarbanes-Oxley, which requires companies to have their Section 404(a) internal control reports audited, are saving plenty in audit fees, but losing even more in terms of lower operating performance and market values.
