Using firms in the Disclosure database, Linck, Netter, and Yang report that the Sarbanes-Oxley Act has increased the size of boards and has created more committees within boards. They also provide almost mind blowing evidence that the costs of boards--and more specifically the cost of compliance with the Sarbanes-Oxley Act (SOX)-- is significantly higher for small firms.
A very short look at some highlights:
"...although SOX does not explicitly prohibit unitary leadership (same person holds the two titles of the CEO and the Chairman of the Board), we see a distinct trend of firms moving away from this consolidated leadership structure..."
"the documented board changes are most significant for firms that are targeted by SOX – firms that originally do not have majority independent boards or firms that do not have completely independent audit committees."
"...small firms paid $5.91 to non-employee directors on every $1,000 in sales in the pre-SOX period, which increased to $9.76 on every $1000 in sales in the post-SOX period. In contrast, large firms incurred 13 cents in director cash compensation per $1,000 in sales in the Pre-SOXperiod, which increased only to 15 cents in the Post-SOX period."Interesting stuff!
Linck, James S., Netter, Jeffry M. and Yang, Tina, "Effects and Unintended Consequences of the Sarbanes-Oxley Act on Corporate Boards" (March 15, 2005). AFA 2006 Boston Meetings Paper http://ssrn.com/abstract=687496