The Sarbanes-Oxley Yawn: Heavy Rhetoric, Light Reform (And it Might Just Work)

Abstract

The enormity of the scandals, the extent of the losses to shareholders and employees of the companies affected, not only of their jobs but also of their pensions, and the prospects of an election in a few months of a Congress now split fairly evenly between Republicans and Democrats made it difficult for the accounting profession to resist reforms that the Securities and Exchange Commission (SEC) has considered making for a long time.").

Corporate Governance and Accountability

“…Coffee (2002) and Cunningham (2003) suggest that by discouraging securities lawsuits and reducing litigation risks, the PSLRA may have contributed to a business environment in which fraud could thrive unchecked. Scholars have attempted to assess the impact of the PSLRA on securities filing and settlement trends.…”

History repeats itself: The failure of rational choice models in corporate governance

“…The Sarbanes-Oxley Act, for example, in large parts elaborates standards of existing law which had either not been fully enforced, or were deemed not sufficiently visible (Cunningham, 2003). Ferrarini and Giudici (2005) make a similar argument with regard to enforcement of corporate governance rules in Italy, emphasizing that law on the books can be very different from its application and enforcement.…”

The Sarbanes-Oxley Act: Legal Implications and Research Opportunities

“…If they conclude that controls are effective when they are not, the situation is akin to that occurring when they inappropriately conclude that financial statements are fair and conform to GAAP. In this case, they may be seen as secondary actors, insulated from Section 10(b) liability (see Cunningham, 2003).…”

“…What is new, therefore, is the singling out of these officers, the attestation to particular compliance matters, including specific certification of the financial statements and the additional attestation concerning controls. While legal scholars debate the significance of these refinements, there seems little doubt that they alter the stakes for officers and therefore the overall corporate compliance landscape (Cunningham, 2003).…”