While the costs of Sarbanes-Oxley continue to mount, the law’s defenders enjoy claiming that it has performed the vital job of restoring investor confidence in the wake of the corporate scandals. No doubt those defenders will be heartened by a new study that shows that 62 percent of corporate executives agree that the law strengthened public and investor trust in corporate America.
After the jump, find out what this isn’t such good news.
But the rest of the results of the survey make this look more like an indictment of Sarbanes-Oxley than a vindication. According to the National Survey of CEOs on Business Ethics, by Georgia State’s Center for Ethics and Corporate Responsibility and Clemson’s Robert J. Rutland Institute for Ethics, 74 per cent of executives said Sarbanes-Oxley had done nothing to improve ethical standards at their businesses. So all those millions spent for compliance have produced no results, according to the executives.
But if you combine these views, Sarbanes-Oxley’s results are even more disturbing. Executives believe that Sarbanes-Oxley improved investor confidence without improving corporate behavior. You don’t even have to squint your eyes very hard to see that, if the executives are right, this means investors have been lulled into a false sense of confidence by the law.
We’ve said before that the ideology of Investor Confidence is dangerous: it can lead to policies intended to instill an unwarranted confidence in the stock market. This divergence between effect on ethics and effect on confidence is good reminder that you can’t spell “Investor Confidence” with a “con.” Who says you can’t put lipstick on a pig?
Survey: CEOs view Sarbanes-Oxley as ineffective, burdensome [George State University via Sox First]
good to know this! all the horsey people on _RIDERLOVE.COM_ are talking about this!! seems they don’t just care about horse and love!
can you guys please just remove this nonsense, no, wait, even better, post the IP address of the person who posted it, etc?
More like: Conning Fees out of Corporate America
who’s with me?
who’s with me?
who’s with me?
We are. That too! (Or should I say, “That three?”)
Too long, didn’t read.
um, you guys planning on covering this yahoo ridiculousness? bueller?
Perhaps 74% of CEOs said ethics did not improve because they were already ethical in the first place. Sarbanes-Oxley condemns all businessmen as guilty because they are businessmen. Anybody motivated by profit must surely be evil, goes the dominant attitude in the culture today. But the real evil is the condemnation of businessmen, whose profit-seeking initiatives have created unprecedented wealth that has improved the lives of billions in the process. Sarbanes-Oxley is disgraceful–but typical of Washington. The only moral thing to do is repeal this perverse law and let the businessmen get back to work.
These days the only people who complain about SarbOx are the people who can’t screw investors the old fashioned way.
I know, I know, it takes massive intellectual capital to screw investors nowadays but isn’t that the price of innovation?
I am SO embarrassed. (slightly offset by the excitement of John Carney responding to MY comment, which is 0.000000003643% as good as a response from Bess)
one of the small ironies of the whole subprime/CDO meltdown is that the auditors’ valuation people should have been catching these issues. but the valuation people typically get their info (like spreads and other assumptions) from management. plus there’s pressure to not rock the boat, and you can value the asset at cost if its less than a year old (varies by auditor/valuation group). even when you’re about as prudent as you can get, and it’s true that there are more data providers out there, like the abx people, there’s always pressure.
it’s all bullshit.
I didn’t realize that SOX was supposed to improve people’s ethics. I thought instead it was designed to limit the ability to defraud investors with loopholes in reporting standards.