In today's world, companies face a minefield of regulations, both governmental and industry-specific and the list seems to be getting longer all the time. Does complying with these regulations just add cost to the business, or do they provide companies with business advantage, such as improved customer service?
It depends on who you ask. The Financial Times estimates that the cost of complying with just Sarbanes-Oxley alone for the average large Fortune 1000 company in the US amounts to a one-off cost of $5.1 million for implementing a qualifying corporate governance policy, plus a further ongoing cost of $3.7 million, on average, for continuing compliance measures over time. Other sources state that annual IT spending by companies that is specifically earmarked for compliance efforts is growing by around 10 percent per year.
For some companies, these costs are just too high and there have been a number of companies that have de-listed from U.S. stock exchanges in order to avoid the cost of complying with the onerous requirements of Sarbanes-Oxley, which has had the knock on effect of fuelling the boom in private equity spending.
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