Sarbanes-Oxley`s not the solution

Independent directors, audit committees or ethical guidelines hardly improve performance or prevent failures

As the subject of corporate governance becomes more relevant and important than ever before, we must not miss the woods for the trees. We must remember that many of the companies in the US which ran into big trouble, had all the corporate governance mechanisms in place, at least on paper.

For example, the Enron board was a model board. When Enron declared bankruptcy, it was in full compliance with the governance provisions of the much publicised Sarbanes-Oxley Act, with the exception of loans to some corporate officers.

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