Michael Oxley Comments on the Problems with SOX

Michael Oxley has some interesting things to say about the bill he co-authored.

Was Oxley aware, his questioners asked, that the law that he and Senator Paul Sarbanes, a Maryland Democrat, rushed onto the books five years ago after the collapse of Enron and WorldCom had contributed to a sharp decline in listings on U.S. stock exchanges? And, knowing what he knows now about the cost and effects of the law, would Oxley – who retired in January after 25 years in Congress – have done it any differently?

"Absolutely," Oxley answered. "Frankly, I would have written it differently, and he would have written it differently," he added, referring to Sarbanes. "But it was not normal times."

I've never much supported SOX, as it seems to impose extra costs on businesses without providing much benefit in return. Despite the intentions of Congress, the quality of accounting information isn't yet where it should be. And as a recent paper pointed out, accounting information is worse for politically connected firms than for others.