This post, from below, seemed to generate some interesting comments, emails, and a few links. For those of you wanting more clarification on why Sarbanes-Oxley is driving up costs, check out this Leaderlog post.
To update what I was trying to say below, let me put it like this. I don't mind regulation when it results in increased information to investors. More information leads to more efficient markets. I am against regulation when it drives up the cost of business and accomplishes nothing. For instance, requiring companies to hire more internal auditors may not improve anything. If the culture is corrupt, you can hire five times as many auditors and it won't set things straight. (Check out this post on the book "Final Accounting" and the Arthur Anderson culture – they hired conformists so that no one would rock the boat) It may do some good for some companies, but there are much deeper issues to be addressed. The biggest problem, in my opinion, is that companies obey the technical details of the law but not the spirit of the law. Thus they sometimes record transactions that are legally valid, but violate the revenue recognition (or depreciation, etc.) prinicples that the laws were trying to correct.
Mrs. Businesspundit is the auditor in the family, so maybe I'll pick her brain some tonight.