Let me tell you something about SOX reports…
By redshift on January 12th, 2005
redshift sets a memo on your desk.
Let me tell you something about SOX reports…
They’re well-nigh useless.
In case you haven’t heard of it, the Sarbanes-Oxley Act of 2002 (Sarbanes, D-Maryland; Oxley, R-Ohio) was an effort to reduce the corruption in financial reporting in the wake of scandals like Enron, Arthur Andersen, and WorldCom. Companies were hugely inflating their reported assets and hiding information from investors. Now, I’ll grant that this was a problem. Huge companies were screwing investors.
Two side notes:
- Were they really screwing anyone but the competition? Inflating your value is dishonest, but it isn’t stealing anything from anyone and it doesn’t hurt how much money the investors get.
- Companies do what they do to make money. It’s the point of capitalism. Is there really a reason that everything should be made public for a public company? Yes, pertinent business information, but we don’t need to know the details about exactly how a company files their data - it’s their job to worry about it, it’s our job to support them with our money if we so choose.
On the face of it, the SOX act was the right decision. It was passed with flying colors. Was it really the right move to make? I submit that it was not.
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