Proponents of Sarbanes-Oxley argue that the compliance costs are justified because it results in greater trust from investors, and that underpins the health of the market.

But with moves to unwind SOX gathering momentum , a new study has come out suggesting that Sarbanes-Oxley is stunting development in smaller firms.

Of course, the timing isn't coincidental. The study has been released at a time when there's the big push to exempt public companies with less than $125 million in revenue from the hated Section 404, which requires extensive internal and external auditing procedures.

All this raises two questions: Does trust offset the costs? And do investors really give a toss about trust, or do they just want good returns? A Washington University study suggests the latter.

According to this study, better governance doesn't enhance trust if the returns don't meet investor expectations. Put simply, investors just want to make money. If the companies have good governance but low returns, they're not happy. Who cares about governance if you're making a killing?

Trouble is these are the same people who complain when they end up in the soup. The flipside is that they would ignore all the red flags and warning signals that good governance is supposed to highlight. As Forbes explains, it shows why smart investors keep making dumb decisions.

And it's not just because of greed either. It seems we are all hard-wired to take short-cuts. As Robert B. Cialdini, a professor of psychology at Arizona State University says in the Forbes piece, we're all susceptible to suggestions by influential people who seem to be in the know, we all want gains that seem to be unavailable to everyone else and for some stupid reason, we trust strangers who appear to be like us.

If that's right, no legislation is going to stop people making the wrong decision. You can't stop people from making dumb choices. Trust is not going to help.