Corporate governance changes in the wake of the sarbanes-oxley act

Yoshiro Miwa

"This paper seeks to draw a lesson for designing major reforms of corporate governance in the future. It recalls the key events leading to the recent seismic shift in corporate governance policies applicable to American public corporations, and identifies the four sources of policy changes -- the Sarbanes-Oxley Act, new listing requirements, governance rating agencies, and tougher judicial opinions (notably in Delaware) about perennial corporate governance issues. It presents a synthetic overview of the numerous reforms, which at the most general level aim to fix the audit process, increase board independence, and improve disclosure and transparency. It pauses to identify the vast territory of unchanged corporate governance rules that are still left to state law, and then examines some of the empirical studies that bear on whether the governance reforms can be confidently predicted...