Sarbanes-Oxley hammers small public companies

Business Reform Magazine provides real biblical answers for real business issues. To visit us, click here.

In the wake of the Enron collapse, Congress passed the Sarbanes-Oxley bill hoping to put the brakes on corporate scandals; but -- like similar government actions -- the bill hurts shareholders instead of correcting the situation.

Congressmen argued that by requiring CEO’s to personally certify financial statements--creating reams of additional paperwork -- it would clean up the scandals.

But the annual cost--for public companies with sales under $100 million -- is a whopping $850,000. For many, that’s the difference between profit and loss. For others, it translates to losing a lot of earnings per share.

Small companies need to be small and nimble, in order to react in the marketplace. Placing burdens on them only cuts shareholder returns. As it is, companies spend billions to comply with regulations, with very little obvious benefit to shareholders.

TRENDING: Public school has failed American kids: Student with 0.13 GPA ranks near top half of class

Rather than require firms to comply with complex filings, why not let the free market operate and do its job? Why not let these companies decide if they want to conform to Sarbanes-Oxley? That way, shareholders could decide if the so-called benefits are real or not. These investors could decide to invest only in companies in compliance with the law -- if they perceive benefits -- or choose those which decide to save the costs.

In ancient Judah, King Josiah said of some people,“No accounting shall be made with them for the money delivered into their hands, for they deal faithfully” (2 Kings 22:7 NASB). True, some deal faithfully while others do not. But the free market is the best arbitrator of such things, not our federal government.

Steve Marr is the former CEO of the fourth largest import-export firm in the U.S., a company which facilitated international trade for many of the largest companies in America. Currently, Steve consults with with businesses and ministries utilizing ancient Biblical principles for success in today's marketplace. Clickhereto contact Steve, or visit his website atwww.businessproverbs.com

.