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Study: Sarbox Reduces Risk-Taking

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Sarbanes-Oxley costs too much. It's hampering the country's economic competitiveness. It forces companies to focus on box-checking rather than business... The list could go on ad nauseum. A new study from researchers at the University of Pittsburgh takes it a step further, revealing that Sarbox is stifling risk-taking in corporate America.

 

Instead of investing in research and development and making other capital expenditures after Sarbox became law, many of the 4,239 U.S. public companies surveyed held on to their cash, according to Business Insurance. Sarbanes-Oxley has also influenced companies to select independent -- and often "risk-averse" -- directors and introduced a fear of litigation, the story says.

 

Interestingly, the study also found that the ratio of research and development spending to assets increased for companies in the United Kingdom in the same time period.

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