Thursday, October 11, 2007

What Has SOX Done For Us Lately?


As a result of Sarbanes–Oxley, we’ve seen business codes of conduct steadily move from a rather loosely defined back-burner element of corporate governance to an element that is now explicit and far more prominent. Now that ethics is at the forefront of corporate concerns, it is important that we take both a short-term and longer-term view of its impact.

In the short-term, for example, we need to continue to assess its reception to date in order to make specific mid-course corrections. An example of a short-term focus would be making changes to the legislation with the objective of making it more “corporate friendly” without compromising its new standards. This is already well underway and is discussed later in this article.

A long-term view would be to consider the legacy of SOX. Is sustained heightened awareness of the surprisingly widespread chicanery and illegal activity in corporate dealings a realistic, albeit modest, goal? Or, are we hoping to institutionalize the principles behind Sarbanes-Oxley’s rigorous and comprehensive laws in our business culture?

What is Sarbanes-Oxley’s track record to date? Is it showing signs of success, and if so, in what ways, to what extent, and for whom? Are corporations making “real” progress toward the goal of preventing unethical conduct and questionable business practices? Has SOX begun to lay the foundation for a cultural shift in how we view, judge, and participate in corporate life? Or, to ask the question in a much broader context and use SOX as a proxy for any legislation intended to improve the ethical standards by which corporate America conducts itself, are our efforts to raise the ethical standards of daily business practices best achieved through legislation?

See full Article.