When it comes to accounting, could a change in the regulatory environment help?
There’s huge controversy about accounting. At one level, all of this is about regulation. That’s how you get changes. But the current environment is very anti-regulation. I don’t see any significant changes in laws on the horizon. But I see a groundswell of concern. Q: Sometimes it takes a catastrophic event to galvanize an industry. This has been the case for some types of environmental regulations. Do you foresee such an event in this arena? A: We are in such a situation right now. How else can you explain the complete meltdown of the dot-coms? People speak about a bubble, but financial reports never provided any warning of this. And yet people have not used the meltdown as a lever for reform. Maybe it’s because many managers and auditors are comfortable with the status quo. Still, I see change coming from two directions: Managers will become increasingly comfortable with measures of intangibles. And demand from investors will motivate managers to disclose more of this information.
