SOX after Ten Years: A Multidisciplinary Review

John C. Coates, IV

Harvard Law School

Suraj Srinivasan

Harvard Business School

January 12, 2014

Accounting Horizons, Forthcoming

We review and assess research findings from 120 papers in accounting, finance, and law to evaluate the impact of the Sarbanes-Oxley Act. We describe significant developments in how the Act was implemented and find that despite severe criticism, the Act and institutions it created have survived almost intact since enactment. We report survey findings from informed parties that suggest that the Act has produced financial reporting benefits. While the direct costs of the Act were substantial and fell disproportionately on smaller companies, costs have fallen over time and in response to changes in its implementation. Research about indirect costs such as loss of risk taking in the U.S. is inconclusive. The evidence for and social welfare implications of claimed effects such as fewer IPOs or loss of foreign listings are unclear. Financial reporting quality appears to have gone up after SOX but research on causal attribution is weak. On balance, research on the Act's net social welfare remains inconclusive. We end by outlining challenges facing research in this area, and propose an agenda for better modeling costs and benefits of financial regulation.

Number of Pages in PDF File: 86

Keywords: SOX, Sarbanes-Oxley Act, Regulation, Fraud, Cost Benefit Analysis, Section 404, PCAOB, SEC

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Date posted: January 17, 2014 ; Last revised: May 14, 2015

Suggested Citation

Coates, IV, John C. and Srinivasan, Suraj, SOX after Ten Years: A Multidisciplinary Review (January 12, 2014). Accounting Horizons, Forthcoming. Available at SSRN: https://ssrn.com/abstract=2379731

Contact Information

John C. Coates
Harvard Law School ( email )
1575 Massachusetts
Hauser 406
Cambridge, MA 02138
United States
Suraj Srinivasan (Contact Author)
Harvard Business School ( email )
Soldiers Field
Boston, MA 02163
United States
HOME PAGE: http://drfd.hbs.edu/fit/public/facultyInfo.do?facInfo=pub&facId=10700
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