By Maxine Shapiro, KERA 90.1 business commentator
Dallas, TX – It was the direct result and outcry after Enron, WorldCom and numerous other accounting scandals. This Wednesday marks the one-year anniversary of the Sarbanes-Oxley Reform Act and nobody is completely overjoyed with the progress. I'm Maxine Shapiro with KERA Marketplace Midday.
Sarbanes-Oxley: the law that was supposed to reform corporate America, thereby restoring confidence back into the investor. Transparency, accountability, and a complete transformation were just a few of the expectations from this sweeping bill. Wall Street was no longer going to be autonomous or immune from scrutiny. And the boardrooms across the country would gladly open their doors to the new law of the land.
So a year later, companies are complaining the changes cost too much to implement, and the loss of management time is not worth it. Some Silicon Valley executives are only seeing marginal improvement to the quality of their financial statements. One of the main components of the bill requires chief executives and chief financial officers to certify and stand behind their companies' financial reports. If anything is found false or "misinterpreted," so says company heads, the penalties are steep - up to $25 million and 25 years in prison. And although there is no getting around the certification process, a study by the Dallas Business Journal found little else is getting done.
And what about restoring investor confidence? The Chicago Tribune reports, "A study by the Conference Board research group found more than half of the 5,000 Americans surveyed said they are less trusting of corporate management and boards of directors than they were six months ago." "Less" trusting, not more trusting. Shareholder advocates think the bill doesn't go far enough. They'd like to see one seat in every boardroom filled with an investor, a large investor, of course. But right now, as the San Francisco Chronicle points out, it's easier to get your name on a recall ballot for the governor of California than it is on a corporate ballot.
And don't even get me started on excessive executive compensation. Happy anniversary, Sarbanes-Oxley. For KERA Marketplace Midday, I'm Maxine Shapiro.
Marketplace Midday Reports air on KERA 90.1 Monday - Friday at 1:04 p.m.
Email Maxine Shapiro about this story.