Sarbox' Unintended Consequences
The Sarbanes-Oxley Act was supposed to enhance corporate governance, but the law is diluting the quality of the boards of directors which are responsible for governance. In a Grant Thornton LLP survey, 65% of senior financial executives of public companies say it is more difficult to recruit corporate directors due to fears about director liability under Sarbox. At private companies not regulated by Sarbox, 78% report no difficulty in finding qualified directors. Contrary to what politicians seem to think, 74% of financial executives think it is appropriate for an accounting firm to perform both auditing and tax services for a client.