Tuesday, August 22, 2006

Collateral damage from Sarbanes-Oxley

Anyone looking for ammunition to argue the odious post-Enron legislation known as Sarbanes-Oxley has done more harm than good should turn to an article in the current issue of the Independent Review.

Its key finding: All the money that financial firms are spending on compliance with the law is money that's been taken away from the research they do to monitor publicly-traded companies.
"We estimate that more than half of the listed companies in the United
States are now unable to attract research coverage, which is generally
thought to be necessary to support investment by institutional
investors."
The law of unintended consequences strikes again.

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