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Not sure if this is addressed in original paper: The cost of regulatory compliance has massively increased. This is not a judgement of whether those regulations

by RayVR 8y ago

Not sure if this is addressed in original paper: The cost of regulatory compliance has massively increased. This is not a judgement of whether those regulations are good or bad for society, just a simple fact that regulations increase the cost to run a business, and large corporations are better able to distribute and manage those costs - sometimes lobbying for additional regulations which become barriers for small companies.

forapurpose 8y ago
> The cost of regulatory compliance has massively increased Many people in this discussion repeat this claim, but what I would love is citation of evidence. We know that regulation has been politicized, with one party trying to eliminate regulations as much as possible. That kind of situation leads to claims that gain currency through repetition - through talking points - not evidence. I'd love to see the actual research and data (from non-partisan sources, not the AEI or Cato, for example). Particularly, we need evidence of the costs, of their relative size compared to (when? increased since when?), and of their impact. For example, according to the article the market was much larger and had more small participants in the 1970s, when the U.S. government in general (I don't know about the stock market) regulated business much more.
- squaresmile 8y ago
  This is not evidence regarding the claim, I simply want to know more about subject. I searched the literature and found the following paper (synopsis below). I still need to find the full paper elsewhere but it looks like it provides a good overview of the impact of SOX. This only concerns SOX though and there might be other regulatory burden (although I can't recall anything significant). Moreover, regulatory burden (if it exists) is only one of many reasons why companies don't go public (which I believe the abundance of private equity played the biggest role). "SOX after Ten Years: A Multidisciplinary Review" by John C. Coates and Suraj Srinivasan http://www.aaajournals.org/doi/abs/10.2308/acch-50759?code=aaan-site http://www.aaajournals.org/doi/abs/10.2308/acch-50759?code=a... > We review and assess research findings from more than 120 papers in accounting, finance, and law to evaluate the impact of the Sarbanes-Oxley Act. We describe significant developments in how the Act was implemented and find that despite severe criticism, the Act and institutions it created have survived almost intact since enactment. We report survey findings from informed parties that suggest that the Act has produced financial reporting benefits. While the direct costs of the Act were substantial and fell disproportionately on smaller companies, costs have fallen over time and in response to changes in its implementation. Research about indirect costs such as loss of risk taking in the U.S. is inconclusive. The evidence for and social welfare implications of claimed effects such as fewer IPOs or loss of foreign listings are unclear. Financial reporting quality appears to have gone up after SOX but research on causal attribution is weak. On balance, research on the Act's net social welfare remains inconclusive. We end by outlining challenges facing research in this area, and propose an agenda for better modeling costs and benefits of financial regulation.
  - forapurpose 8y ago
    Hey - thanks! That's what HN is great for. And I like the nuance of the report (or the abstract) - of course reality is never simple.

by RayVR 8y ago

forapurpose 8y ago

> The cost of regulatory compliance has massively increased Many people in this discussion repeat this claim, but what I would love is citation of evidence. We know that regulation has been politicized, with one party trying to eliminate regulations as much as possible. That kind of situation leads to claims that gain currency through repetition - through talking points - not evidence. I'd love to see the actual research and data (from non-partisan sources, not the AEI or Cato, for example). Particularly, we need evidence of the costs, of their relative size compared to (when? increased since when?), and of their impact. For example, according to the article the market was much larger and had more small participants in the 1970s, when the U.S. government in general (I don't know about the stock market) regulated business much more.

squaresmile 8y ago
This is not evidence regarding the claim, I simply want to know more about subject. I searched the literature and found the following paper (synopsis below). I still need to find the full paper elsewhere but it looks like it provides a good overview of the impact of SOX. This only concerns SOX though and there might be other regulatory burden (although I can't recall anything significant). Moreover, regulatory burden (if it exists) is only one of many reasons why companies don't go public (which I believe the abundance of private equity played the biggest role). "SOX after Ten Years: A Multidisciplinary Review" by John C. Coates and Suraj Srinivasan http://www.aaajournals.org/doi/abs/10.2308/acch-50759?code=aaan-site http://www.aaajournals.org/doi/abs/10.2308/acch-50759?code=a... > We review and assess research findings from more than 120 papers in accounting, finance, and law to evaluate the impact of the Sarbanes-Oxley Act. We describe significant developments in how the Act was implemented and find that despite severe criticism, the Act and institutions it created have survived almost intact since enactment. We report survey findings from informed parties that suggest that the Act has produced financial reporting benefits. While the direct costs of the Act were substantial and fell disproportionately on smaller companies, costs have fallen over time and in response to changes in its implementation. Research about indirect costs such as loss of risk taking in the U.S. is inconclusive. The evidence for and social welfare implications of claimed effects such as fewer IPOs or loss of foreign listings are unclear. Financial reporting quality appears to have gone up after SOX but research on causal attribution is weak. On balance, research on the Act's net social welfare remains inconclusive. We end by outlining challenges facing research in this area, and propose an agenda for better modeling costs and benefits of financial regulation.
- forapurpose 8y ago
  Hey - thanks! That's what HN is great for. And I like the nuance of the report (or the abstract) - of course reality is never simple.