Comments on: Jonathan Macey and SOX http://blogs.law.harvard.edu/corpgov/2007/04/10/macey-and-sox/ Sponsored by the HLS Corporate Governance Program Fri, 29 Aug 2008 05:51:25 +0000 http://wordpress.org/?v=2.5.1 By: Arthur Mboue http://blogs.law.harvard.edu/corpgov/2007/04/10/macey-and-sox/#comment-229 Arthur Mboue Tue, 17 Apr 2007 19:30:59 +0000 http://blogs.law.harvard.edu/corpgov/2007/04/10/macey-and-sox/#comment-229 When I was enrolled in the financial Excutive group (by courtesy) about 10 years ago, I was sent a proposal to attend a compliance corporate Executive program specialized only in health care then. My recollection is that I did use with a little success these course documents to create a more corporate program for compliance. Then and now, I am proud to say that after a series of regulatory implementations including Sarbanes -Oxley corporate accountability Act that can wipe out Billion dollars on the company from liability related costs including post sentencing costs and market dilution (loss in earnings, devaluation of shares), the cost savior and emerging leadership role is the Chief Compliance Officer. In some companies like healthcare, utilities, construction, financial services and government contracting, the compliance officer role is not new. It did help these industries to either achieve strategic accreditation or comply with regulation while cutting liability costs. Whether the CCO has legal, finance or both backgrounds, he, acting as impartial judge of the company and cost effective manager, must focus on how should resources be planned for different compliance requirements? Is the company spending too much or too little on compliance and risk management? does the company have a way to response to events such as missed deadline, contempt charges, surprised external audit, high risk situations and more? Todays's corporate leadership will not allow the compliance function to wait too long before its implementation and recognition as a contributor to bottom line results and regulatory compliance, rather than a nuisance or expense that diverts from strategic goals of company Arthur Mboue, MBA, JD, researcher When I was enrolled in the financial Excutive group (by courtesy) about 10 years ago, I was sent a proposal to attend a compliance corporate Executive program specialized only in health care then. My recollection is that I did use with a little success these course documents to create a more corporate program for compliance. Then and now, I am proud to say that after a series of regulatory implementations including Sarbanes -Oxley corporate accountability Act that can wipe out Billion dollars on the company from liability related costs including post sentencing costs and market dilution (loss in earnings, devaluation of shares), the cost savior and emerging leadership role is the Chief Compliance Officer. In some companies like healthcare, utilities, construction, financial services and government contracting, the compliance officer role is not new. It did help these industries to either achieve strategic accreditation or comply with regulation while cutting liability costs. Whether the CCO has legal, finance or both backgrounds, he, acting as impartial judge of the company and cost effective manager, must focus on how should resources be planned for different compliance requirements? Is the company spending too much or too little on compliance and risk management? does the company have a way to response to events such as missed deadline, contempt charges, surprised external audit, high risk situations and more?
Todays’s corporate leadership will not allow the compliance function to wait too long before its implementation and recognition as a contributor to bottom line results and regulatory compliance, rather than a nuisance or expense that diverts from strategic goals of company
Arthur Mboue, MBA, JD, researcher

]]> By: M. Hodak http://blogs.law.harvard.edu/corpgov/2007/04/10/macey-and-sox/#comment-226 M. Hodak Sun, 15 Apr 2007 14:24:11 +0000 http://blogs.law.harvard.edu/corpgov/2007/04/10/macey-and-sox/#comment-226 "Put aside that the decline in IPOs in the US predated the adoption of SOX and that some evidence suggests that the percentage is again increasing." Such evidence might be suitable as a legal assertion, but it falls far short of the standards for an economically valid assertion. The relevant question is where would U.S. IPOs be absent SOX versus where they are today. I'm not sure enough empirical work has been done to answer this conclusively, but the early studies would not support your implied conclusion of zero or minimal effect, and the anecdotal evidence, for those of us in the markets, is overwhelmingly negative about SOX. Regarding any "groundswell" reaction to current or proposed governance regulations, you won't find them in the press. The public positions of CEOs is an awful barometer of business sentiment. The Business Roundtable is a political organization; it must selectively pick its fights to retain a semblance of credibility with a generally skeptical, if not hostile, public. “Put aside that the decline in IPOs in the US predated the adoption of SOX and that some evidence suggests that the percentage is again increasing.”

Such evidence might be suitable as a legal assertion, but it falls far short of the standards for an economically valid assertion. The relevant question is where would U.S. IPOs be absent SOX versus where they are today. I’m not sure enough empirical work has been done to answer this conclusively, but the early studies would not support your implied conclusion of zero or minimal effect, and the anecdotal evidence, for those of us in the markets, is overwhelmingly negative about SOX.

Regarding any “groundswell” reaction to current or proposed governance regulations, you won’t find them in the press. The public positions of CEOs is an awful barometer of business sentiment. The Business Roundtable is a political organization; it must selectively pick its fights to retain a semblance of credibility with a generally skeptical, if not hostile, public.

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