SOX and The Law of Unintended Consequences

Steve Bainbridge points us to this working paper by William Carney, titled "The Costs of Going Private after Sarbanes-Oxley: The Irony of "Going Private". Here's the abstract:

The Sarbanes-Oxley Act of 2002 added numerous costs to the burden of being a public company. The most onerous of these, requiring inside and outside assessment of internal controls, is only now affecting the costs of remaining a public company. After reviewing the reports of increased compliance costs for larger companies, this paper reports on the increasing numbers of companies choosing to terminate reporting under the securities laws, and focuses on the costs reported for those (generally smaller) companies that disclose their actual compliance costs.

I'm always amazed at how legislators think (or fail to). If you change the costs and benefits of a given course of action (like being a publicly-listed corporation), you'll see changes in the number of people (or corporations) choosing that course of action.

We should have an economics literacy requirement for legislators. Somebody should pass a law!
But then, what would happen?