The Sarbanes-Oxley Debacle
What We've Learned; How to Fix It

  • Title:

    The Sarbanes-Oxley Debacle
  • Format:

    Paperback
  • Paperback Price:

    25.00
  • Paperback ISBN:

    978-0-8447-7194-6
  • Paperback Dimensions:

    8.5'' x 5.5''
  • 146 Paperback pages
  • Buy the Book

Click here to view the full book as an Adobe PDF.

The Sarbanes-Oxley Act of 2002 (SOX) is a colossal failure, poorly conceived and hastily enacted during a regulatory panic. Evidence suggests that the market has estimated that SOX will impose huge indirect costs on top of substantial direct costs. A largely overlooked concern is the act’s potential to turn into a litigation time bomb: the first major market correction will likely become a feast for trial lawyers. SOX’s defenders assert that the business world is better off now than before SOX, but the relevant question is whether it is better because of SOX. Existing institutions could have responded to any problems without a vast one-size-fits-all regulation from the federal government.

SOX should be repealed, but failing that, there is some hope that a recent lawsuit could provide the leverage to enact at least some major changes. The economic costs of SOX could be greatly reduced by prohibiting private lawsuits based on SOX, exempting all but the largest domestic corporations and dual-listed securities of foreign corporations, and clarifying and reducing the requirements of SOX’s controversial internal controls disclosure requirement. The post-SOX era offers opportunities to assess soberly what we have learned about policymaking from the SOX fiasco. There is much to be said for careful regulation that recognizes legislators’ inherent limitations in reforming corporate governance. The Sarbanes-Oxley Debacle seeks to salvage some lessons from the ruins of SOX.

The AEI Liability Studies examine aspects of the U.S. civil liability system central to the political debates over liability reform. The goal of the series is to contribute new empirical evidence and promising reform ideas that are commensurate to the seriousness of America’s liability problems.

Henry N. Butler is the James Farley Professor of Economics, Argyros School of Business and Economics, Chapman University.

Larry E. Ribstein is the Richard and Marie Corman Professor of Law, University of Illinois College of Law.

Also Visit
AEIdeas Blog The American Magazine

What's new on AEI

image Getting it right: US national security policy and al Qaeda since 2011
image Net neutrality rundown: What the NPRM means for you
image The Schuette decision
image Snatching failure from victory in Afghanistan
AEI on Facebook
Events Calendar
  • 21
    MON
  • 22
    TUE
  • 23
    WED
  • 24
    THU
  • 25
    FRI
Wednesday, April 23, 2014 | 12:00 p.m. – 1:30 p.m.
Graduation day: How dads’ involvement impacts higher education success

Join a diverse group of panelists — including sociologists, education experts, and students — for a discussion of how public policy and culture can help families lay a firmer foundation for their children’s educational success, and of how the effects of paternal involvement vary by socioeconomic background.

Thursday, April 24, 2014 | 12:00 p.m. – 1:30 p.m.
Getting it right: A better strategy to defeat al Qaeda

This event will coincide with the release of a new report by AEI’s Mary Habeck, which analyzes why current national security policy is failing to stop the advancement of al Qaeda and its affiliates and what the US can do to develop a successful strategy to defeat this enemy.

Event Registration is Closed
Friday, April 25, 2014 | 9:15 a.m. – 1:15 p.m.
Obamacare’s rocky start and uncertain future

During this event, experts with many different views on the ACA will offer their predictions for the future.   

No events scheduled this day.
No events scheduled this day.
No events scheduled this day.
No events scheduled this day.
No events scheduled this day.