By Marcy Gordon
The Associated Press
WASHINGTON - A year after landmark legislation on corporate governance was signed into law, the authors say it's too soon to fully gauge the impact, but that the measure has had a promising start.
Sen. Paul Sarbanes, D-Md., and Rep. Michael Oxley, R-Ohio, spoke with the Associated Press to discuss their namesake legislation, changes it has brought about and adjustments that might be needed. The interviews were conducted separately.
Question: At the one-year mark, how do you view the significance of the legislation? What has been its impact on investor confidence, on corporate behavior and that of directors, outside auditors and other players? Is it too early to assess?
Sarbanes: We've put in place a good legal framework which offers investors the prospect of good reforms, honest accounting and real protection. ... We hear people say to us, "You did the right thing. This is what we needed." But my guess is that they're still waiting ... to see.
Oxley: Overall the response has been quite positive. ... There is some feeling that the ship has been righted.
Q: Have you heard "before-and-after" anecdotes from companies that illustrate changes in corporate behavior as a result of the legislation?
Sarbanes: I hear from people that they're really re-examining their corporate practices. ... Some complain that they hate to change the way they do things. Companies are scrubbing down their procedures quite carefully. ... We think there's a new attitude developing among corporate boards. ...
Oxley: Some audit committees that used to meet once a quarter now meet once a month, for example. They really have rediscovered the joys of serving on those committees. There's no question it has had a major impact in the boardroom.
Q: Are there flaws in the legislation that have become evident since it's been in effect? Something that, in retrospect, you think should have been done differently?
Sarbanes: I think we need to get everything fully into place and let it work for a while. ... Then we'll be in a better position to evaluate it.
Oxley: There is some concern about costs for companies and the availability of liability insurance (for company officers and directors). ... Congress will review the legislation to see where it could be made stronger and possibly reduce costs. We want to make people understand that ... we want to continue to make things work.
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