With smaller companies expecting some relief from Sarbanes-Oxley next month, there was some debate on the issue at last week's special session held at the University of California-Berkeley. You can find a report on it here but for a more comprehensive overview, check the entry on Professor Larry Ribstein's Ideoblog (scroll down to "Sox at Berkeley").

Ribstein's bottom line is that SOX was a big mistake, and he makes that point well in the slides of his presentation. His argument details huge costs, both direct and indirect, not to mention enormous opportunity costs. But more of that later.

On the other side of the fence of the conference was a crew that included lynn Turner, former Securities and Exchange Commission who is now with institutional investor advisory outfit Glass Lewis.

A recent Glass Lewis study focused on the number of revisions of financial reports by publicly traded companies surging to a record 1,295 in 2005, nearly double the previous year's mark. That comes out to one restatement for every 12 public companies, up from one for every 23 in 2004. And the smallest companies were nearly twice as likely to restate than the larger companies. The implication: when so many companies are getting it wrong, you really need something that checks the quality of information they are providing investors, particularly with smaller companies

But there's no escaping the evidence that Sarbanes-Oxley might be getting in the way of efficiency and choking innovation. It's a point explored in a fascinating Reason magazine piece You Can Be Too Careful .

Or to use the quote from Sarbanes-Oxley compliance consultant Stephen Stanton: "It gives businesses a bigger predisposition to choose inaction over action. There's less intelligent risk taking, a bigger plus for being static and communicating less, because one of Sarbanes-Oxley's requirements is that any document you rely on, whether electronic or paper, to get to the numbers on financial statements, you must preserve."