Companies with Good Internal Controls Have Highest Average Share Price Increases


	Advertise with Sarbanes Oxley Compliance Journal

News

< Back

Sarbanes Oxley : Governance : Survey

Companies with Good Internal Controls Have Highest Average Share Price Increases

Lord & Benoit Report: Do the Benefits of Section 404 Exceed the Cost?

Robert Benoit
President
Lord & Benoit

Lord & Benoit, LLC a national SOX Research and Compliance firm has completed a study of share price movements of 2,481 calendar year end public companies that have undergone two Sarbanes-Oxley Section 404 internal control audits. The study showed that the average share prices of companies with clean 404 internal controls climbed 28% over a two year period starting with the year before SOX was required. The Russell 3000 index only increased by 18% in this same period.

Stock values of companies with adverse 404 controls however decreased 6%. Additionally, the market rewarded companies that transitioned from a first year adverse report (1% increase) to a clean second year report (25% increase). Internal control statistics were mined using AuditAnalytics.com.

"With compliance costs decreasing and share prices increasing by 26% to 28%, the study results indicate that strong internal controls can translate into higher returns to shareholders" says Bob Benoit, President and Director of SOX Research at Lord & Benoit. "With the SEC and PCAOB coming under a lot of pressure because of cost concerns to eliminate Section 404 requirements not only for many current Section 404 filers but also for all non-Accelerated Filers, this research gives one more reason for pause. It would seem that more research and innovative thinking is needed before regulatory bodies and/or Congress act." adds Mr. Benoit.

The complete "Lord & Benoit Report: Do the Benefits of Section 404 Exceed the Cost?" is available by contacting Info@LordandBenoit.com or calling (508) 853-6404 x.204.

Lord & Benoit is a national SOX Compliance firm dedicated to providing cost effective solutions for SmallCap and MicroCap companies. The efficient process is called MicroSox(TM).

For more information, please visit our website at www.section404.org

About Us

Editorial