On one level it confirms the bleeding obvious. On another, it raises more nagging questions about the SOX effect that leave us none the wiser. And it's unlikely to provide much ammunition for the forces wanting to roll back Sarbanes-Oxley.
First, something everyone knows. Small publicly traded companies were disproportionately affected by the Sarbanes-Oxley Act and the number of smaller companies purchased by private firms increased by 53 percent during the first year, according to a RAND corporation report.
But the study suggested the impact was limited and short-term. The impact was only seen on firms smaller than approximately $20 million in market capitalization and was not found in firms of any size after five quarters.
Certainly, the report confirms that more smaller public companies were going private as a result of Sarbanes-Oxley. But what conclusions should we draw?
RAND economist Eric Talley said the numbers could be interpreted two ways.
"Either it is a sign that Sarbanes-Oxley created a burden on entrepreneurship, inefficiently forcing companies out of public capital markets, or alternatively it provided some protection to investors by inducing smaller firms that should never have been public to begin with to abandon that status," Talley is quoted in the RAND media release.
Go figure!
no comment untill now