Analysts vague about the impact of SOX s404

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Global capital markets uncertain about the implications of the Sarbanes Oxley Act could over-react and punish companies that make negative disclosures under section 404 of the legislation, according to a PricewaterhouseCoopers survey.

Three-quarters of international analyts questioned said they would probably respond to negative disclosures under section 404 of the Sarbanes-Oxley Act by downgrading shares or advising a sale - effectively punishing companies for complying with the law.

Section 404 requires that all SEC-registered companies include in their annual report a statement by management and the external auditors on the effectiveness of the company's internal controls over financial reporting. According to PwC, the cost of complying with S 404 is roughly $4.4m per company affected.


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