Corporate Governance Regulation: How Poor Management Is Destroying the Global Economy

Chapter 7

The Underlying Vision

The analysis thus far has sought to provide a comprehensive introduction to Sarbanes-Oxley–era regulation, emphasizing its unique social, political, and economic dimensions. Also provided has been a broad outline of the ongoing regulatory debate, encompassing the various tactics employed,¹ the law's propensity to create a diversity of unintended effects, and the inherent obstacles to be overcome if U.S. corporate governance regulatory policy is to effectively recover from its present deficit. Victory in this regard is by no means preordained. As Representative Oxley noted, the law transcends policy to constitute a sweeping vision: it is “the core principles…[that] are paramount.…”²

Despite the mounting empirical evidence, its leading proponents are pressing forward to implement their vision of corporate America—and beyond. As an obvious example, Dodd-Frank, a legislation formulated in the same mold, constitutes a regrettable step in the wrong direction. A lucent reading of the modern era suggests that being on the “right” side of history offers few guarantees of success, while also suggesting that catastrophic policy blunders are by no means infrequent. Consequently, at a minimum, progress requires the attainment of a lucid understanding of the underlying policy issues.

Econometrics in Policy Analysis

Effective policy research constitutes a vital means of insulating society from a growing propensity to pursue private agendas benefiting a relatively ...