The Complete Guide to Sarbanes-Oxley

Abstract:     
Turning 5 is a major milestone, whether one is talking about a child, a wedding anniversary, or a piece of legislation. As the Sarbanes-Oxley Act approaches age 5, it's appropriate to look back at how the Act has affected American businesses and also to look forward to assess future trends. After all, the Sarbanes-Oxley Act had the biggest impact on American business of any federal securities legislation since the New Deal.

Understanding how Sarbanes-Oxley works and the demands it makes on corporations is especially critical for directors and managers of smaller public corporations. Until recently, the smallest public corporations have been partially insulated from the full costs of complying with the Act by Securities and Exchange Commission (Commission or SEC) rules deferring full application of SOX to such firms. The SEC has announced, however, that this limited regulatory relief will be coming to an end within the next two years. Accordingly, it appears that all public corporations will be required to fully comply Sarbanes-Oxley by 2008 at the latest.

Managers and directors of small public corporations thus now face the same questions SOX has long posed for the largest companies: How do they comply with SOX? How does SOX affect relations within the firm? Should the company go private (a.k.a. "going dark") so as to avoid the need to comply with SOX. A practical guide to SOX basics thus could not be more timely.

This is not a book for lawyers or accountants. I don't want you to get bogged down in legal or accounting technicalities. Rather, it is a non-technical, "plain English" guide for the managers and directors of the 13,000 or so thousand publicly held corporations subject to Sarbanes-Oxley, as well as the managers and directors of the thousands of large closely held corporations considering raising capital via an IPO, which would subject them to SOX, or otherwise facing market pressures to at least partially comply with SOX.

The downloadable paper includes the Table of Comments and Chapter 1 of The Complete Guide to Sarbanes-Oxley.

Number of Pages in PDF File: 42

Keywords: Sarbanes-Oxley, SOX, corporate governance, corporation law, securities law, securities regulation

JEL Classification: K22

Accepted Paper Series