Compliance with Sarbanes-Oxley is expensive.  The initial SEC estimate was $91,000 per company.  This has been shown to be woefully low.[1]  A survey by CRA International disclosed that smaller companies ($75 to $700 million in market cap) faced average second-year SOX compliance costs of $860,000, down 31% from year one.  Companies over $700 million faced year two compliance costs on average of $4.8 million, down 44%.[2]

Strong criticism and call for reform and repeal has arisen claiming disaster.  Compliance is wasteful and too expensive.  Companies that may have gone public will not.  Public companies will go private.  Foreign companies avoid listing in the U.S.  The goal of transparency and shareholder disclosure will be defeated.  Other voices hail the benefits of the Act.  The expense of compliance merely shows that many companies have neglected internal controls.  Costs will decline as internal controls are put in place.  Confidence in the markets will rise attracting capital and listings.  All boats will float higher.[3]

At least for the present, public corporations will need to comply with the enhanced disclosure obligations of the Act.  To the extent that compliance obligations cause corporations to focus on IP assets, we can expect a positive outcome.  Companies can increase their value by capturing, protecting and utilizing intellectual property.  Expenses can be reduced by jettisoning useless assets and by adopting more cost effective management strategies.  The company that captures, protects and manages intellectual property effectively can expect to profit from greater net revenue and higher market value.  In this regard, Sarbanes-Oxley can be a strategy for success.