A Greater Boston Chamber of Commerce study released yesterday says the new Sarbanes-Oxley law imposes expensive compliance burdens on small companies, such as biotech and life science firms that are crucial to the future of the Massachusetts economy.
While Sarbanes-Oxley was designed to improve corporate governance and accountability, the law's unexpectedly high compliance costs could divert the limited resources of a small firm away from innovation and growth, said chamber chief executive Paul Guzzi, who recommends that the law's compliance requirements for small companies be revised.
Start-ups that might otherwise consider selling shares to the public might delay an initial public stock offering because of compliance costs imposed by the law on publicly traded companies.
''Sarbanes-Oxley has had a significant positive impact on corporate governance since its enactment in 2002," Guzzi said. ''But for many companies, the costs of Sarbanes-Oxley outweigh the benefits of going public. Without taking action to improve the legislation, we are putting the companies that fuel our regional and national economy at an unfair disadvantage in this competitive global marketplace."
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