2002 Sarbanes-Oxley Act: Privately-Held Companies Implementation Issues

Abstract

Our research was designed to for two purposes: (1) if the provisions of SOX have merit on their own or whether it is just a mandate by legislators, and (2) to determine if privately-held companies currently not required to implement SOX have done so. In summary, the respondents, who were experienced financial executives with knowledge of SOX and other regulatory governance policies see SOX as an influential piece of legislation. They see some positive benefits to their organizations with implementation of some of the provisions of the act, such as better financing options, better credit opportunities, and opportunities to take the company public. Many of financial executives indicated their organizations are implementing provisions in areas where it cost effective as well making “good” business sense. For example, it is cost effective to implement a formal code of professional conduct for the executives and it does make good business sense. However they are not asking their CEOs or CFOs to certify the accuracy of financial statements nor to the internal control structure. Many of the financial managers indicated they are not implementing SOX on a full scale basis because of the cost, time, and that the lack of benefits derived from implementation.