Have Corporate Reforms Gone Too Far?

By Bevilacqua, Louis J. | Chief Executive (U.S.), June 2004 | Go to article overview

Have Corporate Reforms Gone Too Far?


Bevilacqua, Louis J., Chief Executive (U.S.)


THE HIDDEN COSTS OF TIGHTER CONTROLS.

Every chief executive officer, chief financial officer, general counsel and director of a public company has been inundated with legal inemos explaining the new rules of corporate governance promulgated under the Sarbanes-Oxley Act of 2002, revised New York Stock Exchange and Nasdaq regulations and general securities law paranoia. The goals include total financial statement transparency, more independent directors, disclosure committees and new auditing standards, all of which are positive in some respects. Arguably, these changes have, in part, helped to restore investor confidence in the capital markets and resulted in a resurgence in stock prices in the past year.

I believe, however, there is a hidden cost to these changes that is not being measured. Cl(Os and CFOs at some of the best U.S. public companies have spent the better part of the past three years looking over their shoulders to confirm, certify and reconfirm what they already knew: that their financial statements "fairly presented" the financial condition of the company. The required officers' certifications, disclosure procedures, audit committee protocols, whistle-blower requirements, and redefined standards of independence for directors and auditors may encourage a limited number of companies to develop an infrastructure that actually provides better and more complete disclosure. But the majority of well-managed companies are not substantially improved by the enhanced regulations. Companies run by "bad actors" will not be remediated by the new requirements. And quality companies will still do the right thing by their investors, but at a higher cost.

Aggressive execution of creative strategic plans has always been the hallmark of the best public companies. Obviously, the stricter securities laws and the corporate governance requirements cannot be ignored in the pursuit of profits and higher stock prices. But there is an inherent risk involved. The pursuit of a perfect governance structure is causing management and boards of directors to subordinate the benefits of support, cooperation, vision and trust to a regulatory bias of control and constraints. …

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Have Corporate Reforms Gone Too Far?
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Full screen

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.