The business lobby in the US is up in arms, complaining about red tape and extra costs. Some European corporations are withdrawing from American stock exchanges. And in Asia a number of companies have cancelled plans to list in the US, opting instead for other means of raising capital.
The object of all this fuss, of course, is the tougher US corporate-reporting regulations being introduced through the Sarbanes-Oxley Act, passed by Congress in 2002. Some of the most substantial reforms came into effect in November for US companies and foreign corporations have until July to comply.
Current signs are that America’s sweeping reforms, introduced in response to corporate scandals such as Enron and WorldCom, threaten to have a knock-on effect in Asia and Europe in the form of tighter regulations. That’s not just because of local business crises such as the derivatives-triggered collapse of China Aviation Oil in Singapore and Parmalat in Italy – globalization trends in the finance sector as well as the crusading zeal of US investment funds and officials will likely place pressure on local regulators to adopt large swathes of the US changes.
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