Alex Pollock has an interesting idea to help decide the debate over the true effects of the Sarbanes-Oxley Act on the U.S. securities markets:

[I]f Sarbanes-Oxley 404 were voluntary, would investors differentiate among American companies and pay a premium for the securities of those companies which implemented it, compared to those which chose not to? . . .
In this context, we can say there are two competing theories:
A. Sarbanes-Oxley is bad for investors because the costs are excessive relative to the benefits, and
B. Sarbanes-Oxley is good for investors because it protects them and makes them willing to pay more for securities.
Theory B is usually used as an argument for keeping Sarbanes-Oxley Section 404 mandatory, but it is actually a great argument for making it voluntary.
Under a voluntary regime, if Theory B is right and investors love how they are protected by Sarbanes-Oxley 404, they will bid up the prices of the securities issued by companies who implement it. We will then observe within the U.S. market a premium analogous to the ìcross listingî premium, and everyone will end up following suit.
But if, as many of us believe more likely, investors think their money is better spent on research and development or marketing than on excessive accounting routines, paperwork, and bureaucracy, the companies will respond accordingly. [. . .]
Investor choice would demonstrate whether Theory A or Theory B is correct. Alternately stated, letís send Sarbanes-Oxley to the court of investors.