Last month, a paper was released regarding a study of Sarbanes-Oxley and audit fees. “The Effect of the Sarbanes-Oxley Act (Section 404) Management’s Report on Audit Fees, Accruals and Stock Returns” found that audit fees have effectively doubled for public companies and lowered stock valuations. Is there any doubt that SOX has cost a lot of people a lot of money?

The abstract of the paper (emphasis added):

In 2003, the Securities and Exchange Commission enacted the Sarbanes-Oxley Act (SOX) Rule 404. It required firms with public float of more than $75 million to file a management’s report. I use a regression discontinuity design to quantify the comparative impact of this provision across firms just above and just below the threshold. The management’s report [1] effectively doubled the average annual audit fees from $370,700 to $882,300, [2] reduced discretionary accruals by $8.8 million, and [3] lowered the stock valuation of firms required to file such reports. The results are robust to instrumenting the management’s report in order to control for firms’ ability to manipulate their public float.