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One Itzhak Sharav writes a letter defending the Sarbanes-Oxley corporate-accounting regs on the ground that “[r]udimentary cost-benefit analysis suggests that given the choice, stockholders would prefer corporate spending on tight internal control systems that are significantly lower than the losses that they were likely to sustain due to corporate malfeasance.” I don’t know what the word “likely” is doing in that sentence. But even if Sharav is right–especially if he’s right–wouldn’t we expect stockholders to have demanded this spending and companies to have supplied it to get their capital? And if there was something screwy in the market for corporate control that blocked that market pressure from occurring, shouldn’t be have fixed that rather than imposing regulations?

Ramesh Ponnuru is a senior editor for National Review, a columnist for Bloomberg Opinion, a visiting fellow at the American Enterprise Institute, and a senior fellow at the National Review Institute.


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