It's an interesting question and the answer, I suspect, is yes and no.
Corporate governance regimes around the world have been overhauled in the aftermath of the corporate scandals led by Enron. Which is what makes a recent article by Ethiopis Tafara, the director of the Securities and Exchange Commission's Office of International Affairs so interesting.
The article A Race to the Top: International Regulatory Reform Post Sarbanes-Oxley looks at the way Sarbanes-Oxley clones have been adopted around the world. In all sorts of areas, such auditor oversight bodies, auditor independence, rules on non-audit services, audit committee requirements, internal controls and even Section 404.
Tafara then uses this to defend Sarbanes-Oxley:
"First, and most obviously, it suggests that these major provisions, in and of themselves, have not competitively disadvantaged US markets, simply by virtue of the fact that they have been widely adopted elsewhere.
"Second, it suggests that (at least in terms of these major provisions of SOX) there does not appear to be a race to the bottom among regulators globally, since these provisions are not without substantial costs and do provide enhanced investor protections.
"Third, if one believes that regulators are in fact in a race to optimality, as some economists suggest, then the global adoption of the major provisions of SOX suggests that these provisions, at least in broad outline, have been deemed to be cost-justified by authorities covering the bulk of the world's market capitalization."
Good points but it overlooks a few obvious issues.
Some are raised in the My Daily Fatwa blog:
"If there are problems with Sarbanes-Oxley in the sense that it is making it difficult to attract foreign issuers, does the fact that so many of its provisions have been adopted abroad mean that the real issue may be with implementation? Are these foreign provisions going to go unenforced? Or is the fear that the SEC/PCAOB will over-enforce?
"Or perhaps Sarbanes-Oxley represents another example of the SEC's "regulatory imperialism"-with the SEC first demanding that foreign companies comply with U.S. rules, and now convincing the rest of the world that this approach is the way to go?"
Tafara somehow seems to ignore the fact that foreign regulatory regimes contain nuances that are different from Sarbanes-Oxley.
For example, the Australian regime under CLERP9 and the Australian Stock Exchange Corporate Governance Council guidelines run in parallel to SOX.
But the Australian approach is based more on principles than the black letter law of the US "rules-based approach" that mandates minimum standards in corporate behaviour. Unlike Sarbanes-Oxley, the Australian framework is a mix of legislation, industry regulation and guidelines, and industry-based codes of conduct and in many cases, Australian governance principles are more suggestive, not prescriptive, when it comes to governance issues.
Personally, I always thought the US "rules-based" approach is lacking. It's a bit like giving the burglar the plans to the house, including the code to the alarm system. A principles-based approach has a built-in flexibility that allows companies to better respond to market forces and local industry nuances.
Despite these differences, the world has to move in concert with Sarbanes-Oxley because SOX is the requirement of the world's biggest capital market.
What it also means is that any changes to Sarbanes-Oxley will be watched closely around the world.
no comment untill now