A decade after passage of the Sarbanes-Oxley Act (SOX), critics complain the disclosure mandate drains U.S. competitiveness. Supporters, however, argue that the law contributes to a more holistic awareness of corporate responsibility across big businesses.
"It is helping extend fiduciary responsibility deep into the company," said Laralee Martin, executive vice president and chief financial and operating officer at Jones Lang LaSalle, the commercial real estate company. "If there is concern about bad judgment, it can rise safely to the top.
Martin's remarks came during a debate about SOX and the issue of corporate disclosure this week in New York at the COMMIT!Forum, a gathering of high-level corporate social responsibility (CSR) professionals.
The specific focus of the debate team was on SOX, which dictates policies for independent audits and approval of financial statements at large public companies.
The pro-SOX team included Martin and former U.S. Senator Paul Sarbanes, one of the law's co-sponsors. The anti-SOX debaters were Mark Calabria, director of financial regulation studies at the libertarian think tank Cato Institute; and John Allison, retired chairman and CEO of financial services company BB&T.
SOX was necessary to create "an indispensible safety mechanism" that has helped boost investors' trust in the financial statements they reference when investing in public companies, said former senator Sarbanes.
"The law has unearthed systemic problems and nipped accounting problems in the bud," he said.
Critic Turned Advocate
While Martin was initially very opposed to SOX, she believes the law has helped Jones Lang LaSalle create a far more disciplined set of processes for running and monitoring its financial processes.
Next page: Changing the "tone at the top"