Compared with its costs, the benefits of Sarbanes-Oxley have been debatable, particularly in recent months (yes, accounting manipulations still occur). But a young Harvard Business School professor claims to have found a silver lining in Section 403. A little-talked-about provision of the 2002 law, Section 403 may be helping investors and small companies alike. And its cost has been minimal, unlike that of Sarbox's internal-control provision, Section 404.

According to Francois Brochet, who wrote about the provision for his dissertation at New York University, Section 403 has given investors more timely and transparent information about insider stock trades. The rule has shortened the time between when officers and directors make a change in their stock holdings and when they report it through a Form 4 filing, from within 10 days at the end of the calendar month to just 2 business days.

In his review of more than 50,000 filings of insider trades made between 1997 and 2006, Brochet found a fairly obvious benefit of Section 403 for investors: they can react to insider trades more quickly than before. Plus, dives in stock prices have been less substantial following insiders' sales since the law took effect. Brochet argues that before the rule change, the lag time between an insider's stock sale and the Form 4 filing had given investors reason to suspect that really bad news was being hidden, leading to more stock sell-offs.

Indeed, Section 403 may have put to rest some of the conspiracy theories that investors tend to subscribe to even when legitimate insider trades are made, suggests Brochet's paper, which was published in the latest issue of the American Accounting Association's Accounting Review. "Investors are no longer in the dark for more than a month about insider transactions," Brochet says. "Even if those transactions end up not being informative, at least investors have the opportunity to judge for themselves as soon as they take place."

Meanwhile, smaller companies have seen an upside to quicker Form 4 filings. For those that lack significant analyst coverage, it's been a way for their executives to subtly voice their support of their companies. "Executives at companies with less liquidity can signal their belief that their stock is undervalued by purchasing it on an open market," Brochet says. "The public release of information about the purchase will probably help them make the stock price go up."

To be sure, executives are prohibited from making trades based on material nonpublic information, and many use 10b5-1 plans, which automate transactions, to protect themselves from appearing to make illegal insider transactions.

An even clearer benefit for companies: lack of cost. Section 403 has been one of the few parts of Sarbox not accompanied by major dollar signs. Accommodating the rule change, Brochet says, simply involves a higher number of Form 4s.