Former U.S. Congressman Michael Oxley, vice chairman of Nasdaq, acknowledges that the Sarbanes-Oxley Act he co-authored was too onerous at first -- but says it has since spurred a global compliance trend."The implementation of Sarbanes-Oxley initially brought about more costs," Oxley said in an interview with Wall Street & Technology at the Harvard Club in New York. "It was a kind of 'perfect storm.'"
Compliance costs were initially driven up by the collapse of Arthur Andersen, the accounting firm convicted of obstructing the U.S. government's investigation into the collapse of Enron, according to Oxley.
"Instead of the big eight accounting firms you had five and then four, so that from a supply/demand it drove up costs with the accounting profession," he says.
But the implementation of SOX by the SEC and PCAOB was also "too rules-based," Oxley admits.
Still, changes made [to SOX] in late 2006 by the SEC and the Public Company Accounting Oversight Board (PCAOB) have reduced costs, particularly for small and medium companies, he contends.
"The SEC wisely exempted the very small publicly traded companies ($75m and below) until the costs and benefits come into better focus."
Concerns have grown that Sarbanes-Oxley is deterring some companies from listing on U.S. exchanges due to the burden of compliance.
But Oxley flatly refutes that the costs of SOX outweigh the benefits.
"Sarbanes-Oxley was successful in restoring investor confidence," he said during a conference earlier in the day on records management, which was hosted by Pitney Bowes.
In addition, says Oxley, a recent survey shows that "foreign companies who list in the U.S. enjoy a 30% premium on their stock."
Demand for legislation inspired by the Sarbanes-Oxley Act is spreading throughout the world, according to Oxley.
"You now have J-SOX in Japan; the EU, who were smug until [the near collapse due to mismanagement of] Vivendi, have now adopted [SOX-inspired regulations]. All over the world we're seeing an increase in the focus on compliance and higher standards," he says.
Investors in Africa and the Middle East, Turkey, Brazil, China and Russia, have increased dramatically in recent years, Oxley adds.
"But you have to make sure investors get the information they need," he says.Former U.S. Congressman Michael Oxley, vice chairman of Nasdaq, acknowledges that the Sarbanes-Oxley Act he co-authored was too onerous at first -- but says it has since spurred a global compliance trend. Melanie Rodier has worked as a print and broadcast journalist for over 10 years, covering business and finance, general news, and film trade news. Prior to joining Wall Street & Technology in April 2007, Melanie lived in Paris, where she worked for the International Herald ... View Full Bio