SOX: Sarbanes-Oxley Act of 2002

On the hand the expenditure that is incurred by firms due to the requirements by SOX also increased. This is inconsiderate of the size of the company due to audit costs that are disproportionate. Firms that have a market capitalization that is $75 million have to spend the highest proportion of the revenues generated in the process. Thus, the Act leads to an increase of expenditure for companies by about 1.14% in 2004 alone. This has resulted in the smaller firms leaving the public market and going private as they try to cut down on the rising costs due to the new regulations (Kamar, 2007).

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