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U.S. Securities and Exchange Commission

Responses to ACSPC Request for Public Input

General Impact of Sarbanes-Oxley Act

Question 2. Has SOX affected the relationship of smaller companies with their shareholders? If so, how?

08/02/2005 13:57:44   SOX is killing smaller companies with higher legal and especially auditing bills. Shareholders, inevitably, will see the diference in the P&L, and will sell their shares to reap higher rewards elsewhere (hurting the company's stock price), or will force the company to sell or go dark (neither of which was ever inteded by Mike Oxley or Paul Sarbanes, but which is happening with increasing frequency).

08/02/2005 14:31:32   For me, it has absolutely made me paranoid about buying stocks of small companies because I have been burned too may times by small companies delisting and deregistering their stocks, which destroys shareholder value.

08/02/2005 17:44:12   It is important that shareholders have more information and have enhanced reliance on small public reporting, but the complexity and cost of SOX may actually diminish value for a shareholder. Small companies inherently have risk and the focus should be on outline the risk. The cost of infrastructure to support full SOX implementation may take away from efforts of running a company to enhance shareholder value

08/02/2005 18:15:55   keeping the enrons and world coms in line is being done on the back of the bb and pink companies, that tend to be small.

08/02/2005 23:36:32   Earnings have been deminished due to the cost of compliance.

08/03/2005 01:39:17   I don't believe our investors, even the large institutional investors, understand 404 audits. The governance issues in SOX are logical. The audits are terrible, destructive and almost totally unknown to investors.

08/03/2005 07:01:34   You have thrown the baby out with the bathwater, no doubt. Good executives dont want to be CEO's, and why should they. Its now akin to being a drug dealer... No one wants to say anything to their shareholders and lawyers are now running the companies. was that the intention??

08/03/2005 08:55:04   Shareholders have been notified of the cost burden it places on their company

08/03/2005 08:58:39   SOX affects the relationship because we have more unneeded cost. The stockholder is not getting the benefit of profits that are going to cover this expense. We estimate a cost of $150,000 initially and an additional $100,000 per year. For a small bank that is too much.

08/03/2005 10:40:26   Yes. Reduced the ability to pay higher dividends and or expand services. Our annual net income is estimated this year to be $1.4 million and costs associated with SOX compliance estimated to be $200,000 (14.2% of net income)or $.25 per share.

08/03/2005 10:50:30   The research coverage of small cap companies has all but disappeared

08/03/2005 11:03:25   SOX has had little effect so far since the costs will be recognized in 2005 and 2006. This I expect will have an effect due to the hit on earnings. Otherwise no effect has been noted.

08/03/2005 12:17:58   fear

08/03/2005 13:55:42   May be some lack of shared info.

08/03/2005 15:01:40   Yes, Not much other than advising them of progress or lack of progress on complying with SOX.

08/03/2005 15:22:49   The cost of compliance in both real dollars and management's time as negatively impacted our profits and ability to focus on other customer service issues. This no doubt translates into lower shareholder value.

08/03/2005 16:58:51   As of now we haven't seen this. Of course if we spend 1/3 of our profits on SOX, shareholders won't be happy.

08/03/2005 18:01:35   Please look into item no 29

08/03/2005 18:05:44   I do not think that SOX has effected the relationship of smaller companies with their shareholders in any meaningful way.

08/03/2005 18:30:29   x

08/03/2005 19:54:33   SOX continues to permit the naked short selling of a company's shares to retail buyers, who aren't aware they are receiving counterfeit shares. This naked shorting drives the prices per share artificially lower, causing the shareholders to lose faith in the company that they had (for the most part) done significant Due Dilligence before buying. Sox has shown itself to be worthless to the current and future actions, but also the grandfathering of prior naked shorts (counterfeit shares) keeps the damage permanent against the shareholder how holds devalued shares, and the company, who now sees incredible dilution of the share structure through no fault of his own.

08/03/2005 19:55:50   INTEGRITY!

08/04/2005 09:17:19   I don't beleive so.

08/04/2005 09:37:56   Investors do not understand and rarely seek to understand the implications of the new rules - seems a small advantage

08/04/2005 09:39:15   Not sure

08/04/2005 10:40:16   Sadly, we have more reporting requirements but the information is not used by our investors. We are not traded on any exchange. The result of SOX is additional cost with no significant cost.

08/04/2005 12:09:05   Not really. I think the shareholders are continually advised my management of the changes, however, I don't see that the shareholders have seen any tangible evidence that SOX is helping. Similar to the Savings and Loan situation. A couple bad apples created an overreaction in Washington and both the accounting world and the SEC. As part of our SOX 404 preparation, the underlying theme is that the main control is the whistle blower policy and having all of our employees well versed in the mechanics and importance of this policy. If that's the case, isn't the 404 an incredible inefficient use of shareholder money?

08/04/2005 13:38:24   No. We were already communicating much more to shareholders because of regulation FD.

08/04/2005 14:20:27   It has lowered the earnings!

08/04/2005 18:05:44   Yes. We are explaining why our operating costs are increasing.

08/05/2005 10:54:31   No

08/05/2005 12:38:34   Integrity

08/05/2005 12:44:28   No

08/05/2005 15:34:53   Yes - Our shareholders are affected by the impact on profits. They are also affected by the diversion of managements attention from strategic planning to accounting and auditing issues.

08/05/2005 15:43:46   Stockholders in annual meetings are questioning whether the effect on profits (ranging from 20% to 70% pre-tax in estimated first round 404 costs) indicates problems in management even though management and board are asserting that it is basic cost of documenting existing control systems. Costs into future are estimated to be only a small proportion of first round expect for high ongoing audit fees, Stockholders are asking what they are getting in when the shares are seldom traded.

08/05/2005 16:45:38   Yes, SOX has affected shareholders by raising appropriate concerns and forcing companies to disclose errors in reporting and judgment. It has given shareholders real information from which to judge the competency and the ethics of the men and women in charge of these companies, as well as their merits to serve in the roles and trust that they have been given.

08/05/2005 19:33:08   It has no effect on shareholder relationships.

08/06/2005 13:52:06   No

08/08/2005 11:10:11   this I cannot tell.

08/08/2005 11:39:29   Most of our sharesholders are also customers of the bank so the impact has been limited. The company spends more money on staffing, outside assistance and audit fees that impact the level of earnings and dividends.

08/08/2005 14:06:10   I don't think it has had a significant impact on the relationship between management, the Board and the shareholders. Shareholders recognize the need to comply with the regulations and I don't believe that has had any appreciable impact on the relationship between the company and shareholders. I do believe that the shareholders and management in most smaller public companies are on the same side of the issue when it comes to SOX 404. That is, they both see no signifcant benefit from the exercise and really see the implementation of SOS as a tax on their business and they feel that they are paying for the sins of a few well publicized episodes of corporate malfeasance.

08/08/2005 15:43:24   It could for those having difficulty complying or those with material weaknesses. As a shareholder, I would question whether my management team had what it takes for managing a public company in the 21st Century.

08/09/2005 09:30:31   Yes! Our knowledge is focused on small banks. All banks want and need shareholders. This law makes it expensive and a burden to keep small shareholders.

08/09/2005 13:04:16   Theoretically, it should give an additional measure of confidence, but unfortunately is too complex for most shareholders to understand. Hence, most of what they will hear will be about the additional costs of SOX to the company.

08/09/2005 16:26:34   There has been no impact except to erode value by reducing earnings...in the banking industry I do not see any value added because of our existing regulatory framework.

08/09/2005 17:25:10   I don't beleive our shareholders care about SOX or its impact on our small company.

08/10/2005 09:04:41   not for us. we are still private, and shareholder group is still small and generally well informed.

08/10/2005 13:44:39   None at this time since it is early in the game.

08/10/2005 16:00:18   Yes, negatively. We used to be able to communicate one-on-one with them about general things and not worry about it. Now we avoid it rather than be accused of "not informing all shareholders" at the same time. We end up sounding too much like big companies and that's not what our shareholders want us to be.

08/10/2005 17:18:15   Yes - increased scrutiny of the Company's value related to shareholder return, offsetting of the additional costs for SOX, concern of the toll of SOX on Company employees and a significant distraction of management.

08/10/2005 22:09:27   This is easy....reduced their return since CEO's and Presidents ( myself as President) don't want to take risks that may in the end create greater wealth for the investor. Under SOX we are considered guilty under the current atmosphere and our legislators want that to be the case (my opinion). There are enough laws on the books to prosecute the offenders, SOX was nothing but legislators not applying the current penalties of fraud with a very heavy hand, and nothing more then an attempt to mislead the investors that all CEO's and managements were on the edge of criminal activities without the Sox legislation.

08/11/2005 08:35:22   Yes, substantially more time preparing mandated documents.

08/11/2005 20:27:22   No effect. When we explain to our shareholders that SOX cost them 20% of last year's EPS, they were not too happy.

08/12/2005 13:12:10   I have not seen firsthand any change at this point, but when the heavy expense of compliance is recognized, there will be an impact on the shareholder's investment. When that occurs, it could change the investor's attitude toward investing in smaller companies where the expense impact is felt more accutely at the bottom line.

08/12/2005 14:46:45   Shareholders have a greater appreciation for the role and support provided by internal audit as the SOX 404 project champion.

08/12/2005 16:35:01   It dilutes our investor's returns and, therefore, puts added strains on the relationship.

08/12/2005 18:34:31   Shareholders are largely uninformed about SOX and therefore do not perceive any benefit. Similarly, they were completely confused as to how this project could cost so much.


08/15/2005 13:08:27   I have not noticed any change in shareholder relationships other than SOX is a burden without significant shareholder benefit.

08/15/2005 14:27:30   In my experience, shareholders have been indifferent to the effect of SOX. I have watched several companies report 404 problems of various kinds and even resulting restatements that produced next to no market reaction. I think the investing public sees this as largerly a paperwork exercise.

08/15/2005 14:33:20   Sharesholders only know that ir costs them earnings per share.

08/15/2005 15:10:05   They're in a position of telling their shareholders "everyting is fine" existing via Section 302 but then disappointing them when they truly analyze their controls for 404.

08/15/2005 15:13:01   I received several questions from investors regarding our 2004 results. One of the biggest changes in expenses from 2003 to 2004 was SOX costs. Most of the investors were very upset with the costs of SOX and did not believe the costs improved the market perception appreciably.

08/15/2005 15:14:45   Before, reports were signed by the CFO and CEO...Now, the statements reporting the controls and the attestations of management that were apparent and valid to any one with their head on straight have been mandated as a methodology to enforce SOX. That is BS. And the fact that the Feds cannot convict even the most egregious of CEO's involved in misstatements, is even more alarming.

08/15/2005 16:33:43   Our shareholders have been negatively effected by the huge jump in costs. Our annual audit cost us $160K in the year before implementation. We spent $2,500,000 on projects to support implementation, and our total audit costs were $1,300,000. The relationship has been unchanged other than the disgust at the cost.

08/15/2005 16:41:14   Not in our case

08/16/2005 09:51:21   I do not believe that SOX has impacted our relationship with our shareholders.

08/16/2005 10:10:36   No opinion.

08/16/2005 10:21:17   No.

08/16/2005 10:26:28   no, only 4% of our stock is held in the US

08/16/2005 10:27:48   It will affect shareholders as they realize the costs incurred. Most smaller companies are looking at meager ways to enhance their profitability, and the financial impact of SOX will significantly set these institutions back. To keep interest in these institutions, shareholders may expect higher and higher dividend payouts, as the prospects of market appreciation diminish.

08/16/2005 10:42:02   No. We were respected by our investors as being a solid, ethical management team, and we still are.

08/16/2005 10:44:16   Not from our perspective.

08/16/2005 10:45:16   No

08/16/2005 11:18:54   Most of our shareholders are unaware of Sox; however, for the ones that are they ask if it will provide any benefit to them. I have to answer that it will not, but will only decrease the company's earnings and, therefore, their investment.

08/16/2005 11:52:16   We have not seen this yet.

08/16/2005 12:14:10   There probably has nt been much change here, perhaps some degree of confidence increase for the stockholder.

08/16/2005 12:15:34   The only impact so far is reduced earnings due to additional costs of compliance.

08/16/2005 12:40:54   not much

08/16/2005 12:42:56   No, every shareholder I have talked to agrees with us: SOX is a total waste of money for smaller companies.

08/16/2005 13:04:14   Other than shareholders asking if we are considering going private, I see no change in relationship with our shareholders

08/16/2005 13:12:04   Yes. We are much more reserved in disclosures seeking ways to say something (to satisfy the SEC) but yet say nothing (to avoid SOX-inspired risk).

08/16/2005 13:19:29   As a smaller company, we have less ability to filter that which is required to be disclosed and that which is not, and short of paying attorneys significant fees to filter information for us, I believe many smaller companies are erring on the side of throwing too much information at sharehodlers, which dilutes its value and tends to make the true standing of a company more muddied.

08/16/2005 13:20:23   I think it has improved the relationship by imposing a higher quality and transparency to the smaller company's accounting and reporting processes. This has given shareholder's more confidence in public reports.

08/16/2005 13:25:32   We do not sense a change. We do have to field the question often about the cost of SOX.

08/16/2005 13:27:00   No impact.

08/16/2005 13:30:33   Not really, other than by sharply increasing our costs.

08/16/2005 14:08:05   No.

08/16/2005 14:23:10   The SOX requirements have not significantly impacted the shareholder relationship of smaller companies that have a history of being profitable and good quality of earnings.

08/16/2005 14:44:16   Yes, the comopanies are not as nimble and are minimizing the risk a small company can and should take and impacting the relationship with shareholders.

08/16/2005 15:15:12   The added expense of SOX has had and will continue to have a negative effect on the small company's ability to continue to pay quality dividends and attact new shareholders.

08/16/2005 16:08:50   Not to this point.

08/16/2005 16:09:47   No opinion

08/16/2005 16:16:04   We have disclosed the potential cost to our shareholders and they can determine that the cost is very substantial to the Company's historical pretax profit and net income or loss. The cost could eliminate profitability or substantially increase a loss for this company, putting its future at risk.

08/16/2005 16:45:09   Yes. The shareholders don't see any benefits of SOX and question why the company is spending so many resources on compliance rather than building shareholder value.

08/16/2005 18:35:41   None noted.

08/16/2005 19:18:56   I do not think SOX has affected the relationship of smaller companies with their shareholders except to the extent that SOX plays in smaller company valuations.

08/16/2005 21:29:07   Increased expense without a corresponding benefit to the shareholder.

08/16/2005 21:40:38   Yes. It has stolen shareholder wealth and transferred it to accounting firms. Foreign competitors not faced with these idiotic distractions are focusing on delivering quality goods and services while our market share dwindles.

08/17/2005 06:57:10   It is unclear what shareholders have actually "gained" from SOX. For a company to spend hundreds of thousands of dollars or more for SOX when the company only makes a few million dollars, the cost of SOX doesn't seem to make sense.

08/17/2005 10:59:57   We have very few shareholders and a very small float. One shareholder controls more than 50% of the shares and managemnet has 20% ownership. SOX has become a burdden in cost and distraction to managemnet.

08/17/2005 12:28:22   Spending $1.4 million or 10% of net income certainly has affected them. We are certainly a better company relative eot internal caontrols, but the cost was way too high and the value did not offset it.

08/17/2005 12:36:00   I don't see an impact. Generally, investors in smaller companies seem to be either very knowledgeable about the specific industry and have the means to evaluate the company's performance and legitimacy irrespective of SOX.

08/17/2005 12:48:33   Too much info confusing to shareholders and excess cost limits Company expansion.

08/17/2005 16:18:39   Our auditors determined that we had material control weaknesses, therefore we had to disclose such weaknesses in our SEC filings, and as a result, our shareholders have less confidence in management.

08/17/2005 18:49:20   There has been more shareholder activism in smaller companies in holding management accountable for various items that were not as transaparent before. More questions are being asked about controls and board effectiveness and the relationship between senior management and boards. I think this is good for the overall market and provides shareholders of smaller companies a greater voice.

08/17/2005 18:49:27   A huge burden on our earnings - see above

08/17/2005 19:31:08   I don't think our shareholders believe they are more secure in relation to our company as a result of SOX. We have always been very straight forward with them. I believe SOX has dramatically increased our cost of compliance without giving much value to our shareholder base.

08/17/2005 21:27:12   Not at all.

08/17/2005 22:55:14   Not clear that is has had any affect on shareholder relations

08/18/2005 08:03:31   Yes - Shareholders know all profits will go to auditors and lawyers.

08/18/2005 15:26:25   Once the costs of compliance hit, it will definitely impact the relationship.

08/19/2005 02:56:12   No visible change has been noted

08/19/2005 11:44:44   We haven't noticed any effect. Looking at the bigger picture (especially for larger companies) I would think in the long run it would enhance shareholder confidence in financial reports and proper corporate governance.

08/19/2005 12:28:03   Do not at this time see a relationship change. Shareholder expectations are just that, expectations and need to be addressed for all phases of the business.

08/19/2005 13:49:01   No, at this point in the life of SOX there has not been a noticeable impact on the relationship with the Company´s shareholders, other than the $1,500,000 additional cost referred to in Question 1. However, since my company has not paid dividends, it may not be indicative of other dividend paying companies.

08/19/2005 14:40:28   no comment

08/19/2005 14:50:07   Not at this point, however, a certain set of shareholders could become disgruntled either because of reduced earnings should we remain public, or reduced liquidity should we delist.

08/19/2005 17:03:28   The ones that become non-reporting upset the shareholders because of the lack of public financial information. Public companies are becoming more cognizant of the type of information that they provide to shareholders.

08/21/2005 03:34:34   The companies are now more dependent on their shareholders, because many issues require shareholders approval today.

08/21/2005 04:46:26   No

08/21/2005 22:19:50   No

08/22/2005 14:21:23   Our shareholders question the costs imposed on such a small company

08/22/2005 15:20:23   No.

08/22/2005 15:47:02   No

08/22/2005 15:47:34   I am not aware of any effect SOX has had with our relationship with our shareholders.

08/22/2005 17:54:28   Small established companies are less attractive as a result of SOX. The costs and risks increase, which decreases economic value. Shareholders therefore have a correspondingly decreased interest in such companies.

08/22/2005 17:56:59   No, other than to answer questions about its cost

08/22/2005 19:27:18   We had to disappoint our shareholders in te fourth quarter of 2004 partly due to the high cost of SOX.

08/22/2005 20:10:17   We believe the relationship with shareholders has not been changed at this point, but will be if we are unable to comply with a large company version of Internal Controls, as non-compliance with regulatory agencies is a red flag to any investor.

08/23/2005 00:42:38   Little change - other than curiosity about how much it will cost and whether we will be compliant. little focus on the actual controls that would be in place, just whether we'll pass and therefore not get punished in the market.

08/23/2005 07:47:56   No change with share holders

08/23/2005 09:50:27   Yes. We are under more scrutiny and it takes more time for person to respond to shareholder questions now.

08/23/2005 15:56:30   No

08/23/2005 16:49:34   Yes - It has reduced the profitability due to increased costs which in turn reduces the potential to pay dividends to shareholders.

08/23/2005 18:10:00   not really.

08/23/2005 21:11:03   Shareholder response, especially those companies currently in the midst of compliance will likely be negative. The significant increase in audit and compliance fees can amount to a negative 10% impact to the bottom line. Unlikely that shareholders will view the resulting decrease in profits as a good outcome particularly when most small cap companies are already undervalued, have limited access to the broader captital markets and are now further disadvantaged.

08/24/2005 08:50:18   No

08/24/2005 10:14:02   Going private will certainly not be in the best long term interest of our shareholders. These shareholders purchased "high risk" penny stocks because of their belief in the future of the company. Now our future as a public company is being determined by our ability to comply with SOX and not on the merits of the company.

08/24/2005 11:28:21   As a private company we have not experienced a change in the relationship with our shareholders. Our shareholders are committed to good corporate goveranance but must weigh the costs of compliance with SOX versus the benefits realized.

08/24/2005 12:24:07   No.

08/24/2005 14:30:13   Since our shareholders and therefore our BOD members are primarily venture capitalists at this point, yes. They are very interested in that we are SOX compliant and don't have any significant deficiencies or material weaknesses.

08/24/2005 16:19:27   They think we are all crooks. They forget the fact that many of us are honest hard working professionals with good intentions.

08/24/2005 16:26:56   No opinion.

08/24/2005 16:54:47   No

08/24/2005 20:16:09   The expense of SOX compliance is hard for our shareholders to understand. Most of our shareholders are individuals in our branch communities. They have no basis for understanding the amount of time and expense for our company to be in compliance with SOX 404. Our cost for the SOX audit alone is double our finacial audit expense and that does not include cost of employee time, software, and outside vendor assitance. We estimate the cost for us to implement SOX along with the CPA expense to be over $300M for our bank. For a small company such as ours that is a big bite out of our profitability.

08/25/2005 13:39:06   We are a privately owned company

08/25/2005 15:23:41   Due to the timing relief, it has not (to-date).

08/25/2005 16:04:36   Not really.

08/25/2005 17:02:43   No.

08/26/2005 12:41:42   No. If we were able to directly charge synthetech Shareholders for the cost of implementing and maintaing SOX compliance - they would see limited value and refuse to pay.

08/26/2005 13:07:22   Delisting has ended the relationship altogether ie it has literally forced out many shareholders.

08/26/2005 15:10:01   Yes. The more time and money we have to spend on needless regulations (or duplicated regulations), the less time and money we have to spend on improving our primary business and making money for our shareholders.

08/26/2005 15:31:29   I don't believe so.

08/26/2005 16:22:08   Our relationship hasn't changed.

08/26/2005 17:46:13   The complexity and the risk of being a director in a public company today is unbelievable, making it very hard to recruit and maintain the board. The proftiability was hurt by the hug SOX-related expenses so the stock values suffer. There is a constant feel of unease and fear.

08/26/2005 19:53:54   Not to any appreciable extent. Investors in small companies expect a certain degree of risk and the additional burden of SOX has not changed that.

08/27/2005 11:21:03   No; the CEO and CFO certifications are being signed mostly without any hesitation, regardless of internal control weaknesses. Smaller companies don't have the 'layers of management' issue that internal controls address.

08/28/2005 23:37:43   Cost of Internal Control Programs and other forms of SOX compliance have weakened profits.

08/29/2005 07:07:37   No.

08/29/2005 10:21:15   Shareholders are aware of the focus on the act, however, they will not fully grasp its ramifications until the initial year of adoption when the majority of external costs for auditing and consulting hit the financial statements and, in turn, their earnings per share and possibly dividend rates.

08/29/2005 10:21:25   Shareholders are aware of the focus on the act, however, they will not fully grasp its ramifications until the initial year of adoption when the majority of external costs for auditing and consulting hit the financial statements and, in turn, their earnings per share and possibly dividend rates.

08/29/2005 11:21:29   SOX definitely takes time away from running the Company and complying with regulation. It will however make investors feel better about how the company is ran and what controls are in place.

08/29/2005 14:18:47   I do not believe that SOX has affected the relationship of smaller companies with their shareholders directly. I think that if anything, it has made them consider how accountable they want to be to their shareholders - and that might prompt them to wonder if it´s worth their status as publicly-traded entities. It´s not a bad thing for them to consider. If a firm isn´t concerned about playing by the rules established for publicly-traded companies, then they don´t have to be publicly-traded companies. Not every small firm grows up to be Microsoft; I´m not sure the capital markets are worse off without marginal players.

08/29/2005 14:53:30   Yes, with this shareholder. Because of my relationship with a small public company I am intimately familiar with the misdirection of management´s efforts and company resources that compliance has cost and is costing.

08/29/2005 15:31:21   A small percentage of shareholders may be aware of SOX and its impact, but few have voiced any questions.

08/29/2005 16:10:53   Yes---I have to explain at my annual meeting of shareholders why I am spending 11.4% of last year's earnings on additional compliance activities. How do I tell my shareholders that the expense is justified?

08/29/2005 16:20:53   I don't think so, because the majority of our shareholders are not knowledgeable about SOX.

08/29/2005 17:09:27   When shareholders of a small, public company see net earnings reduced by as much as 10-15% to pay for SOX compliance, they will respond in a negative manner. The costs are affecting the ROA and REO of these companies and could affect future dividend payments.

08/29/2005 17:12:26   I think some shareholders question whether the added compliance costs are justified. We are currently a one bank holding company that of course is highly regulated already with the bank regulators.

08/29/2005 17:12:43   Has given little comfort to the shareholders, as evidenced by flat/lower stock prices. Shareholders see ongoing costs to comply as a reduction in cash to grow the company or increase dividends.

08/29/2005 17:36:32   Since the origianl intention when listing was to theoretically make it easier to access capital for expansion plans it seemed acceptable to shareholders, since in our case we have not been able to add capital to carry out our plans it seems a waste to shareholders.

08/29/2005 19:02:32   I don't believe so in our case. Our reporting has always been very transparent. Only large companies with many divisions have disclosures that gloss over details. Also, fraud in a small company is difficult to hide for any period of time.

08/29/2005 19:05:24   Following release of our proxy, which disclosed that audit and related fees nearly tripled and that fees paid to our independent registered public accounting firm represented nearly 1% of total revenues, we received communication from a number of shareholders expressing concern regarding the magnitude of these costs.

08/29/2005 21:00:01   I don't believe SOX has affected smaller companies any differently than larger companies as it relates to relationships with shareholders.

08/30/2005 15:04:16   Absolutely - our company is paranoid about what information or insight can be provided to investors. Therefore, the amount of information provided to investors has declined by more than 50%. The ability to provide insight and perspective is by its very nature subjective and therefore something that companies stay away from. Consequently, companies do not provide such "insight" to investors!

08/30/2005 15:07:00   The cost to implement SOX has significantly impacted the earnings of smaller companies which deters investors.

08/30/2005 16:27:18   Our majority shareholder is quite concerned with the cost of adhering to SOX vs. the benefit to the Company.

08/30/2005 17:08:46   Not sure. No specific incidents with Company and its shareholders.

08/30/2005 17:23:36   Northern Growers started as a co-op. The majority of the shareholders are local farmers. The confidentiality of information until the quarterly reports are filed is a new concept to investors who started out in a co-op mentality.

08/30/2005 18:26:14   Shareholders, and in our case limited partners, of smaller companies generally recognize the investment risks involved in a smaller company. The effect of SOX on these investors has been only to diminish the value of their investment due to the high costs associated with compliance.

08/30/2005 18:48:02   For some smaller companies yes, for others no. A company with good IR has always had good communications with their shareholders. A company with lax IR may now have better communications with them.

08/30/2005 18:51:48   Our company competes in large part with smaller companies that are not public. These companies will not have to incur the additional costs associated with the SOX regulations or have their management redirect their energies from the operations of the business to this compliance. In addition, because these costs will be substantial (as a percentage of sales) for smaller companies, they will have an impact on operating ratios. That may well make smaller companies a less attractive investment for many shareholders.

08/30/2005 19:47:16   Yes, we have found that certain small companies can go private by requesting a voluntary delisting ("opt-out") without shareholder approval. Accordingly, some shareholders may not be receiving fair value for their shares. This is of particular concern for the minority shareholders.

08/30/2005 21:07:56   No.

08/30/2005 21:39:41   We consistently have to explain to our shareholders why our corporate costs and expenses have significantly increased. We have faced increased pressure in the past to lay-off employees and streamline operations. As a result, certain material weaknesses exist in our controls that we believe may not have existed before these cost cutting measures. The result of adding more employees, external consultants, and the extremely high cost of our external auditors have forced us to spend a lot of time explaining issues relating to SOX.

08/30/2005 23:57:28   Yes. Shareholders continue question the progress of SOX but not understand it is a complicated and time consuming task. Shareholders also questioning how much we spend in SOX404.

08/31/2005 08:31:59   Yes, more disclosure is required and more frequent meetings with the audit committee and board of directors are required.

08/31/2005 09:09:25   Yes, less communication to shareholders.

08/31/2005 10:19:14   Not really.

08/31/2005 10:21:37   Major shareholders are concerned with the cost.

08/31/2005 14:00:12   Some of our larger shareholders have questioned the benefit to shareholders of Section 404 vs. the cost. There has been no other change in the relationship.

08/31/2005 14:00:16   To my knowledge, SOX has not affected our relationship with our stockholders directly. Our interaction with stockholders had not changed. Conceptually, I can see two possible effects: (1) with a "clean" opinion from auditors concerning internal controls, stockholders could respond positively with the confirmation of a reliable internal control system, or (2) due to the costs associated with SOX compliance, shareholder value could be negatively impacted due to a potential decrease in earnings.

08/31/2005 14:12:37   Perhaps the most unfortunate consequence of SOX 404, especially as it relates to smaller companies, is the shifting focus of these companies to regulatory compliance. We often hear the CFO´s and other senior finance managers of our clients lament the fact that they must now dedicate a significantly larger portion of their time to compliance efforts than to supporting the operations of their business. Because smaller companies do not have the personnel or other resources to operate a project management or similar SOX compliance office, the burden of completing this work falls to finance employees already over-worked by their day-to-day job requirements and the increasing complexity of current accounting standards. We believe this is having a direct impact on the relationship with shareholders. Increasingly, more and more of small companies´ resources are being directed to compliance efforts rather than operational activities that might increase shareholder value.

08/31/2005 14:25:37   Yes. All in a derogatory way. They don't understand why we are paying $110,000 to do things we already do.

08/31/2005 14:32:46   In our case, we have not seen, at this point, a change in the relationship with our shareholders.

08/31/2005 15:19:27   Yes, smaller companies are having to explain the strained bottom line due to increased costs related to SOX compliance.

08/31/2005 16:05:33   Sox has made it a little easier for shareholders to access information on a company which could be done without the requirement to do so.

08/31/2005 16:13:45   We have not noticed a difference in our relationship with our stockholders.

08/31/2005 16:16:33   2. SOX may have affected the relationship of companies with their shareholders. Shareholders may inquire about companies´ preparedness of SOX, but this information is not a priority. Regulation FD has materially reduced the amount of communication between companies and their shareholders. Companies are no longer able to discuss information that has not already been disclosed.

08/31/2005 16:29:59   Increased costs therefore lower income and usually lower stock price as a result.

08/31/2005 17:16:33   No

08/31/2005 17:57:10   Not so far

08/31/2005 18:22:30   We have not seen a meaningful change, except where companies have gone private and thus do not report as frequently.

08/31/2005 18:23:08   Not sure, typically there is more risk assumed with an investment in a smaller company and that is usually the expectation of the shareholder. Stocks are usually grouped together for comparative purposes based on their size already.

08/31/2005 19:16:05   2. We have seen little change in our relationship with our shareholders. Most shareholders do not appear to be aware of the Act or its possible impact upon the company.

08/31/2005 20:55:07   Not yet but they will when the company has to become fully compliant with SOX. The company will report escalated costs with a negative hit to the bottom line with no value or benefits derived from spening those funds.

09/01/2005 11:40:19   I believe that shareholders have a different view of the individuals/management of publicly traded companies. There seems to be more questions and lack of trust of management. Management must spend a considerable amount of time and effort on their 404 efforts and are less able to focus on driving their business forward.

09/01/2005 14:30:54   The provisions of SOX makes it necessary to clear all communications with legal counsel and/or the auditing firm. Managements dare not use their own judgments as they have in the past.

09/01/2005 17:12:34   Investors understand the burden of SOX on small companies. This generally means a much harder time of making a good profit and ultimately hurts the competitiveness of small companies versus larger companies.

09/04/2005 07:42:16   No.

All Survey
Main Survey



Modified: 10/13/2005