Sky Blog
In this age of firebrand political rhetoric and sniping from the right and the left, Wall Street has taken more than its fair share of criticism. One of the most significantly misplaced criticisms, however, derives from a gross misunderstanding of …
In a recent study, we examine the flow of workers between the Public Company Accounting Oversight Board (PCAOB) and large U.S. audit firms. The PCAOB, created by the Sarbanes-Oxley Act of 2002, oversees the audits of public companies by, among …
Clawback provisions authorize firms to recoup compensation from executives upon the occurrence of financial restatements or executive misbehavior. The first clawback provision in U.S. federal law was Section 304 of the Sarbanes-Oxley Act of 2002 (SOX 304). SOX 304 requires …
Beginning at least as far back as Professor William Carey’s famously withering 1974 Yale Law Journal article about Delaware’s “enabling” of bad corporate actors, critics of the state’s corporate jurisprudence have alluded to a “race to the bottom” in which …
It’s widely assumed that executives are less likely to inflate earnings at high profile companies under a good deal of regulatory oversight. And yet it’s also widely known that managers in high profile companies have an incentive to overstate their …
In our recent paper, we investigate the association between employee whistleblowers and outcomes of financial misrepresentation enforcement actions by the Securities and Exchange Commission (SEC) and Department of Justice (DOJ). We examine SEC and DOJ enforcement actions for financial misrepresentation …
A cyber-attack is a risk that every firm must manage. Prior studies raised doubts about how harmful cyber-attacks actually are. In particular, studies used the market reaction to cyber-attacks to show that they cause only small losses that decrease over …
On February 21, 2018, the SEC issued new Guidance regarding cybersecurity disclosure and governance requirements applicable to SEC reporting companies. In our earlier Client Update on this topic, we discussed the disclosure considerations addressed in the Guidance. In this Client …
In 2011, the Securities and Exchange Commission (SEC) introduced a Whistleblower (WB) program as part of the Dodd-Frank Act to protect investors through greater deterrence of securities law violations and more effective enforcement. The program offers financial incentives to provide …
Several major corporate scandals in the United States during the early 2000s brought attention to corporate governance of large U.S. companies. As a result, Congress passed the Sarbanes-Oxley Act (SOX), and the Securities and Exchange Commission (SEC) announced several regulations …
The Securities and Exchange Commission (SEC) Division of Corporate Finance (DCF) reviews and regulates information in public filings to “deter fraud and facilitate investor access to information necessary to make informed investment decisions.”
Commentators criticize the SEC for …
Whistleblowers play a significant role in detecting corporate fraud. For example, recent high-profile financial frauds such as the Enron scandal and Bernard Madoff’s Ponzi scheme were brought to light by whistleblowers. To encourage more whistleblowers to come forward, the Securities …
Excessive risk-taking by corporate executives is often blamed for triggering the financial crisis of 2008. Therefore, it is crucial to understand the nature of corporate risk-taking so as to prevent, or reduce the likelihood of, a future crisis. In theory, …
As organizations continue to evolve and grow, so too does the role of the general counsel. Recent, diverse developments underscore how general counsel are no longer just corporate lawyers but also essential executive officers.
These developments include the emergence and …
Throughout the 1990s, the Big 5 accounting firms made a concerted effort to enter the legal services market. By the close of the twentieth century, legal networks directly owned or closely affiliated with the Big 5 were major players in …
Following the corporate governance scandals of the early 2000s, the effectiveness of board monitoring came into question. In response, Congress passed the Sarbanes-Oxley Act of 2002 (SOX) in an attempt to increase monitoring and improve corporate governance. In conjunction with …
“What does Sarbanes-Oxley mean? That’s when two members of U.S. Congress fiddle and half a million accountants in Europe start dancing.”[1]
President Donald Trump pledged during his electoral campaign to repeal some of the reforms that came about …
In common law countries such as the U.S., corporate governance aims primarily to protect shareholders from managers’ self-dealing. Post-Enron reforms such as the Sarbanes-Oxley Act of 2002 and various Securities and Exchange Commission rules are examples of this shareholder-oriented approach. …
Corporate governance has become even more important since the collapse of major firms in the 1990s and the global financial crisis of 2007-2008, and the relationship between financial reporting and the capital markets is a big reason why. The debate …
Attempts by U.S. federal officials to regulate corporate governance have been criticized by prominent scholars as “quackery.”[1] Major reforms like Sarbanes-Oxley and Dodd-Frank may in fact do far more harm than good. But what if these efforts at healing …