Not since the passage of the Securities and Exchange Commission Act of 1934 have matters of corporate governance received such concentrated attention. The failures of a series of notable US companies, beginning with Enron Corporation, have reignited attention toward effective corporate governance.
The single most remarkable governance-related outcome of the Enron failure is the passage of the Sarbanes-Oxley Act of 2002. Congress passed this legislation as a means for remedying the types of governance failures that are believed to have significantly contributed to Enron's downfall.
With the momentum of Sarbanes-Oxley propelling them, other governing bodies quickly followed suit with their own sets of governance changes. Both the New York Stock Exchange and NASDAQ, for example, proposed more restrictive governance guidelines in the latter half of 2002. These primarily focused on means for achieving greater independence in the boardroom. The Conference Board also issued a new report in early 2003 with recommendations on governance best practice, with particular attention to the role of the board's Audit Committee.
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