In the wake of Sarbanes-Oxley, the policies, politics and practices that shape corporate finance remain far from settled.
In July 2002, President George Bush travelled to New York and spoke to a rapt audience just a stone’s throw from Ground Zero. Pledging to punish those wrongdoers whose misdeeds and acts of destruction threatened the American way of life, he unveiled a plan to battle the “moral confusion and relativism” that had proven “devastating” to so many innocent people. His remarks had nothing to do with the terrorist attacks of September 11th 2001. Rather, he was addressing Wall Street in the wake of the Enron and WorldCom scandals, and describing a host of programmes to restore investor confidence at a time when the Dow Jones industrial average languished at just over 9,000.
Three weeks after he laid out a strategy to, as he put it, “move corporate accounting out of the shadows,” the president signed the Sarbanes-Oxley Act of 2002 into law. Far from ending the spate of corporate scandals, however, that event signalled the beginning of a long and often tortuous effort to reform the governance, auditing and reporting practices of American businesses. “Sarbox represented a tectonic shift in the focus of securities regulation,” says James Cox, a law professor at Duke University. “It reached right into company boardrooms and mandated certain requirements about how companies operate. No one thought that was a place securities law could go.”
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