The Sarbanes-Oxley Act turns 5 this summer, and while there are still some who hope the law chokes on its birthday cake, others — even some of SOX’s harshest critics — see some good beginning to surface.
In this Wall Street Journal article, JoAnn Lublin and Kara Schannell interview some of SOX’s most outspoken critics and discover something surprising: While many of them say complying with the regulation is too expensive, they also agree that it exposes many dangerous flaws before they morph into full-blown scandals. Quoting from the article:
” ‘There is without question greater accountability in the boardroom,’ says Thomas Lehner, an official of the Business Roundtable, a Washington group representing big-company CEOs. More boards resolve potential problems ‘before they fester and explode,’ concurs John Olson, a senior partner at Gibson, Dunn & Crutcher who advises directors at about a dozen concerns.
“And institutional shareholders hurt by the scandals applaud the law’s impact. ‘Sarbanes-Oxley really has been a critical safeguard in reassuring investors and restoring confidence in the integrity of companies’ financial statements,’ says Dan Pedrotty, head of the AFL-CIO’s Office of Investment.”
Do SOX’s benefits outweight its costs? Click “Comments” below and let us know what you think.