Looking Back and Looking Forward: Sarbanes-Oxley and the Future of Corporate Governance

In this Article, we argue that all groups: business leaders, regulators and shareholders, should recognize the steps that must be taken to create a competitive, fair and ethical corporate climate. We are not calling merely for “voluntary cooperation” from businesses to improve the current situation. Indeed, SOX exists and is appropriate for this situation precisely because it imposes baseline obligations with which corporations are required to comply. Moreover, other regulations regarding independent directors, expensing of stock options, etc. are needed and are vital to keeping business interests in line with society’s. However, business leaders and regulators will have an easier time promoting a healthy marketplace if industry gets “ahead of the curve.” In the end, business leaders must do just that by leading and implementing broad mechanisms of self-regulation and monitoring. Most important, the changes that need to be made are neither radical nor difficult. Executives and regulators must adopt common-sense reforms. Through proactive regulation, public officials should create and align corporations’ incentives so that they can then find market solutions to governance issues