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Is This What Is Meant By ‘Investor Protection’?

Is This What Is Meant By ‘Investor Protection’?

by Rick Turoczy on June 1, 2006

In response, Congress cobbled together the “Public Company Accounting Reform and Investor Protection Act” of 2002 — popularly known as the Sarbanes-Oxley Act (SOX for short). As he signed it into law, President Bush praised SOX for making “the most far-reaching reforms of American business practices since the time of Franklin Delano Roosevelt.” Others have been less kind; Yale law professor Roberta Romano, for example, memorably called SOX “quack corporate governance.”

Congress hoped SOX would restore investor confidence by curbing various corporate governance excesses, encouraging director independence from management, and especially by toughening up accounting standards so as to enhance capital market transparency and the integrity of disclosures. Whether any of these benefits have been achieved is debatable and, if so, any such benefits have proven almost impossible to quantify.

Is This What Is Meant By ‘Investor Protection’?

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