What is the advantage of this corporate honesty index?
SMALL PUBLIC companies have been bristling under the Sarbanes-Oxley Act, the post-Enron law intended to restore trust in corporate financial reporting. The Securities and Exchange Commission plans to relieve these small companies of some of the act’s requirements. Presumably, the costs imposed on these corporations outweigh the benefits to investors, so some recalibration seems appropriate. But as the SEC considers which changes to Sarbanes-Oxley might be in order, it has a chance to do something else: reward honest corporations, large and small, for their good behavior. The 2002 act includes two types of regulations. One type should apply to every public company — for example, basic accounting regulations. With good reason, the act specifies activities companies have to report, how to calculate various items in their accounting statements, and so on. Such regulations need to be standardized, because investors, regulators, corporate boards, and corporate management need identical meas
Rewarding corporate honesty By Tamar Frankel | January 2, 2007 SMALL PUBLIC companies have been bristling under the Sarbanes-Oxley Act, the post-Enron law intended to restore trust in corporate financial reporting. The Securities and Exchange Commission plans to relieve these small companies of some of the act’s requirements. Presumably, the costs imposed on these corporations outweigh the benefits to investors, so some recalibration seems appropriate. But as the SEC considers which changes to Sarbanes-Oxley might be in order, it has a chance to do something else: reward honest corporations, large and small, for their good behavior. The 2002 act includes two types of regulations. One type should apply to every public company — for example, basic accounting regulations. With good reason, the act specifies activities companies have to report, how to calculate various items in their accounting statements, and so on. Such regulations need to be standardized, because investors, regulators,
