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    Discuss: Sarbanes-Oxley Act

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    Critics of the Sarbanes-Oxley Legislation argue that SOX 404 reduces the stock valuations of small firms.

    Question: What is SOX 404? Specifically, how could SOX 404 reduce the stock valuations of small firms? Why is this important? Explain.

    © BrainMass Inc. brainmass.com June 4, 2020, 3:32 am ad1c9bdddf

    Solution Preview

    There are two sides to this story. Section 404 could potentially reduce the stock value of certain small firms, and it goes hand-in-hand with what is known as the cost of compliance. Section 404 provides a comprehensive assessment of internal controls within the firm. While various internal controls can be implemented at a low cost or no cost, other internal controls are costly. This ...

    Solution Summary

    This solution explains SOX 404, and how SOX 404 could reduce the stock valuations of small firms. A thorough explanation of why this is important is provided.