The people really hurt by SOX are:

1.) Early startup employees. These people don't get rich unless the company gets really big - like, public-company big. Acquisitions tend to cut their growth potential and fold them into a larger corporation just as they're hitting their stride. And if the company just stays private, they never see liquidity on their stock options, and might as well not have them (in fact, many companies that intend to stay private just don't give out equity, because it complicates financial reporting). They're screwed either way.

2.) Customers. Because exits are smaller, capital costs are lower, and it's very difficult to convince someone to join your startup, recent startups tend to be less ambitious. That's why there're all these complaints about "frivolous" Web2.0 companies. Building an ambitious company, like another Google, after SOX would require convincing investors that the company can get big enough to justify the SOX reporting costs, convincing employees that it'll succeed in that, and then actually executing on that while shunning acquisition offers. It's much easier just to pick off the low-hanging fruit.

3.) The investing public. They're shut out of investing in promising growth companies. Instead, they have to put money into large existing companies, which blow shareholder wealth on overpriced acquisitions. The managers get rich, the entrepreneurs get rich, the retail shareholders get screwed.

It's telling that in Web1.0, most people dreamed about joining a successful startup. In Web2.0, most people dream about starting a successful startup. The incentives are not there for people to sign onto an existing company.

Yes! I wish more people talked about this. Especially with the tax benefits, issuing dividends is the way to go.