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"SOX has improved accountability"

March 18, 2008

Michael G. Oxley,  Vice-chairman of the NASDAQ Stock Market
Michael G. Oxley
Former US congressman Michael G. Oxley, co-architect of the famous Sarbanes-Oxley Act 2002, which tightened corporate governance norms for US companies, was in India last fortnight in his new role as the vice-chairman of the NASDAQ Stock Market, Inc. He met BT’s Shalini S. Dagar. Excerpts:

Q. Has Sarbanes-Oxley Act worked?
A. The intent was to restore investor confidence and improve transparency and accountability. When the Enron and Worldcom (meltdowns) took place, the average American took them very personally. We could not have sat still and waited for the storm to pass. The SOX Act, therefore, marked a seminal shift in Corporate America.

Q. But has the SOX Act increased the cost of compliance in the US?
A. It has gone down rather than up. Initially, it may have risen as the AS-2 accounting standard was 330-pages long. This has now been replaced by the AS-5, which is 60 pages long, scalable and risk-based. After a difficult start, we have found the right balance.

Q. Several foreign companies now prefer to list on markets outside the US. Are US markets losing their attractiveness?
A. Following the growth of the other economies, companies will naturally want to list in their home markets. NASDAQ, however, continues to be an attractive destination. A premium is attached to companies that adhere to the compliance levels required in the US.

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