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The Sarbanes-Oxley Corporate Responsibility Act was passed in 2002 in response to a number of corporate

accounting scandals that rocked companies such as Enron and Tyco.

But has Sarbanes-Oxley produced the intended results? Chairman of the Cato Institute

William Niskanin does not think so.

What has been the impact of the Sarbanes-Oxley Corporate Responsibility Act on the business community?

The most direct measurable impact is the substantial increase in audit costs.

Regular audit costs have increased 57% in 2005 a year for companies with total

cost for section 404 have increased about four million dollars a year for

companies with total revenues of about five million dollars a year.

Section 404 is the clause outlining internal controls.

Aren't those necessary for a reliable financial reporting?

No, I think not.

The SEC had the power to do most of what was necessary here. There are some

measures that should be taken to improve the corporate governance, but nothing that is in

Sarbanes actually will help that.

How has Sarbanes-Oxley affected the number of corporations that are listed on American stock exchanges?

Well, quite a few smaller firms have delisted from the American exchanges, in other words, gone private.

And about 30 foreign firms have delisted from American exchanges just to be listed only on

a foreign exchange.

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