WASHINGTON–Sarbanes-Oxley regulations have caused companies to take a more risk-averse track, focusing on building their cash reserves rather than developing new products, according to a professor at the University of Pittsburgh.
Passed by congress in 2002 and aimed at eliminating such scenarios as those of Enron and WorldCom, the Sarbanes-Oxley Act, or SOX as it is known, requires companies to keep tighter controls over their financial reporting and increase the accountability of senior executives.
The regulations, however, also have been the subject of criticism, with many opponents questioning whether their costs outweigh the benefits they provide. Peter Wallison, senior fellow at the American Enterprise Institute, where the results of the study were unveiled, said that SOX "has proved substantially more costly than anyone anticipated."
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