Spend any time with folks from small public companies and you’ll inevitably hear them gripe about Sarbanes-Oxley, the 2002 law aimed at reforming corporate governance post-Enron. It’s too expensive, they’ll say; other critics complain that “SOX” has killed the venture-capital and initial-public-offering markets. But one of the law’s authors–former Ohio Congressman Michael Oxley, who’s now a bigwig at Nasdaq–says that’s hogwash. IPOs took off in 2004, ’05 and ’06, Oxley said in Dallas this morning, and companies were given more discretion in SOX compliance starting in 2004. “Today now all I get is, ‘You guys didn’t go far enough,’ ” said Oxley, who’s at the podium in this photo. To hear more of his thoughts–he was appearing at an event focusing on corporate trust put on by Edelman Public Relations Worldwide–just make the jump.
During his remarks at the Hotel Crescent Court, Oxley reviewed some of the key “errors of commission and omission” that he thinks got us into the current economic mess.
They included: interest rates that were kept too low after 9/11, the SEC move allowing investment banks to increase their leverage ratios, and the demise of Lehman Brothers. Also mentioned: too little transparency in the derivatives market, weak regulation of Fannie and Freddie, inflexible mark-to-market accounting rules, and blunders by the credit-rating agencies.
As a result, Oxley said, the “townsfolk are charging the castle with pitchforks.”
So what’s the solution? He cited the stimulus bill, the need for a more forward-looking regulatory structure, and a “clearinghouse” for newfangled over-the-counter financial products.
In the midst of all this happy talk, Edelman’s U.S. CEO, Matthew Harrington, disclosed the results of the company’s 2009 Trust Barometer–it 10th annual study of business trust and credibility. The study revealed that public trust in business these days, not surprisingly, is pretty much zilch.
Fewer people trust business today than ever before in the study’s history–even during the post-Enron period. The personal credibility of CEOs is at a six-year low and, according to the study, people are clamoring for more government regulation and control.
The key to rebuilding trust, according to Edelman? Companies have to help develop solutions to global problems, realign their business practices to benefit society, rein in executive compensation–and keep reinforcing the message that they’ve seen the light.
I didn’t hear any “Hallellujahs!” from the audience when the event was over, though. They may have been praying silently, thanking God that things didn’t look any worse.