After the dramatic convictions in the Enron fraud trial on Thursday, analysts expect fresh scrutiny of the law, inspired by one of corporate America's worst scandals, toughening standards for business leaders.
The guilty verdicts in the Texas trial of former Enron chief executives Kenneth Lay and Jeffrey Skilling may prompt fresh debate in Congress over the ethics law passed in 2002 at the height of the scandals, known as the Sarbanes-Oxley Act.
The Enron scandal shook the corporate world and "it did spark wholesale change" in corporate regulation, said Henry Hu, professor of corporate governance at the University of Texas.
"And right now, we are rethinking whether all the changes made sense from a cost-benefit standpoint," Hu said.
A storm of protests from US businesses and foreign firms listed in the US over the costs of compliance has reached Congress, where efforts are underway to modify the law.
The Sarbanes-Oxley law "imposed mechanistic bureaucratic procedures to overcome the natural propensities of human nature," said Alex Pollock, a resident fellow at the American Enterprise Institute, who said he hopes the Enron verdicts would be a "catharsis" that prompts a reform of the law.
"I think it's high time to address the imbalance created by the law," he said.
Some domestic and foreign companies have said they would delist their stocks from US markets rather than comply with the burdens of reporting under the new law.
"The high burden of regulation and compliance is potentially outsourcing America's lead in the world's capital markets," US Representative Tom Feeney, author of a reform measure, said last month.
"Companies are increasingly turning to London or Luxembourg instead of New York. It is time to review the effects of Sarbanes-Oxley in order to maintain the net advantages and reform those provisions that put investors, companies, and the American economy at a disadvantage," he said.
The US Chamber of Commerce argues the regulations have cost billions of dollars.
"Entire industries have been consumed by multiple, sweeping demands from competing regulators for their data, e-mails, and correspondence," the chamber said in a recent statement.
"These excesses have discouraged bold business decision making, have sent both domestic and foreign companies fleeing from public markets, and have hurt efforts to attract strong board members and executives to public companies," the statement said.
Even supporters of the law acknowledge it may have imposed excessive costs on publicly traded companies, forcing them to include an extra layer of audit controls and to complete additional paperwork.
"I think we need to reform Sarbanes-Oxley," Thomas Donaldson, a professor of business ethics at the University of Pennsylvania's Wharton School who had testified in Congress in favor of the 2002 law, told reporters.
"It was rushed into existence. Its main aim was to calm the markets, to calm investor sentiment, which it did. At the same time it has been interpreted by accounting firms in extremely expensive, suffocating ways, and it costs way too much. The bang is not worth the buck," Donaldson said.
But Donaldson said the Enron verdicts may work against a reform of the Sarbanes-Oxley law.
With the scandals mostly passed, Donaldson said, "We are now in a position where we can go back to Sarbanes-Oxley and reconsider things."
But the Enron verdict, he said, "makes people say we were right all along to get tough, that they were bad guys."
RETHINK? The defense ministry and Navy Command Headquarters could take over the indigenous submarine project and change its production timeline, a source said Admiral Huang Shu-kuang’s (黃曙光) resignation as head of the Indigenous Submarine Program and as a member of the National Security Council could affect the production of submarines, a source said yesterday. Huang in a statement last night said he had decided to resign due to national security concerns while expressing the hope that it would put a stop to political wrangling that only undermines the advancement of the nation’s defense capabilities. Taiwan People’s Party Legislator Vivian Huang (黃珊珊) yesterday said that the admiral, her older brother, felt it was time for him to step down and that he had completed what he
Taiwan has experienced its most significant improvement in the QS World University Rankings by Subject, data provided on Sunday by international higher education analyst Quacquarelli Symonds (QS) showed. Compared with last year’s edition of the rankings, which measure academic excellence and influence, Taiwanese universities made great improvements in the H Index metric, which evaluates research productivity and its impact, with a notable 30 percent increase overall, QS said. Taiwanese universities also made notable progress in the Citations per Paper metric, which measures the impact of research, achieving a 13 percent increase. Taiwanese universities gained 10 percent in Academic Reputation, but declined 18 percent
UNDER DISCUSSION: The combatant command would integrate fast attack boat and anti-ship missile groups to defend waters closest to the coastline, a source said The military could establish a new combatant command as early as 2026, which would be tasked with defending Taiwan’s territorial waters 24 nautical miles (44.4km) from the nation’s coastline, a source familiar with the matter said yesterday. The new command, which would fall under the Naval Command Headquarters, would be led by a vice admiral and integrate existing fast attack boat and anti-ship missile groups, along with the Naval Maritime Surveillance and Reconnaissance Command, said the source, who asked to remain anonymous. It could be launched by 2026, but details are being discussed and no final timetable has been announced, the source
CHINA REACTS: The patrol and reconnaissance plane ‘transited the Taiwan Strait in international airspace,’ the 7th Fleet said, while Taipei said it saw nothing unusual The US 7th Fleet yesterday said that a US Navy P-8A Poseidon flew through the Taiwan Strait, a day after US and Chinese defense heads held their first talks since November 2022 in an effort to reduce regional tensions. The patrol and reconnaissance plane “transited the Taiwan Strait in international airspace,” the 7th Fleet said in a news release. “By operating within the Taiwan Strait in accordance with international law, the United States upholds the navigational rights and freedoms of all nations.” In a separate statement, the Ministry of National Defense said that it monitored nearby waters and airspace as the aircraft