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Costs of Being Public Rise 90% under Sarbanes-Oxley

BY Steven W. Vazquez
September 01, 2003

Costs directly associated with being public have almost doubled as a result of Sarbanes-Oxley (the Act), with more increases on the way, according to a study by our national law firm, Foley & Lardner. The rise in costs, which affects all public companies regardless of market capitalization or revenue, largely is driven by increases in accounting fees, director and officer insurance premiums, and legal fees. To a lesser extent, the Act also affects director compensation costs, fees paid to director search firms, public relations and investor relations costs, additional compliance personnel, and financial reporting costs.

Our firm, in conjunction with KRC Research, conducted a study to measure the direct financial impact of compliance with Sarbanes-Oxley. We undertook the study because little information existed that quantified the costs associated with the perceived benefits in reforms that are intended to promote improved shareholder democracy and shareholder value.

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