I'm back from my trip up north to the Hoover Institution. Those guys really know how to throw a party. The two-day conference was impeccably organized, superbly catered, and packed with really interesting speakers.
Upon my return, I discovered that SSRN had already posted the essay from which my lecture was taken: Sarbanes-Oxley: Legislating in Haste, Repenting in Leisure.
Abstract: This essay was prepared for presentation as a lecture to the Hoover Institution. In it, I focus on three areas in which the Public Company Accounting Reform and Investor Protection Act, popularly known as the Sarbanes-Oxley Act (SOX), has proven especially problematic. First, the legal ethics rules added to the Act at the last minute have proven incapable of dealing with the incentives that condition lawyers to turn a blind eye to client misconduct. Second, the structure Congress chose for the Public Company Accounting Oversight Board (PCAOB), the accounting oversight board created by SOX, turns out to have serious constitutional defects. Finally, and most importantly, corporate compliance costs have gone up far more than anyone anticipated and are staying up far longer than even Cassandra might have predicted. Worse yet, these costs disproportionately impact smaller public corporations, which are an important engine of economic growth. Taken together, these three areas of concern highlight why Congress should think twice before trying instant legislation in the future.
This piece was designed to be the anti-law review article: short, with no lengthy background section and almost no footnotes. As it turns out, however, Hoover is only going to puiblish the third section. So if some enterprising law review wants to add some footnotes and publish the whole thing, drop me a line.
