Why U.S. corporate governance regulation has lost its way, and what must be done to improve it Modern history persuasively demonstrates the inexorable link that binds comprehensive regulation to the global economy. This important book, rather than simply recount a litany of corporate governance failures, persuasively explains why, despite policymakers' best intentions, regulation has failed in the modern era. An objective study intended for a diverse readership, Corporate Governance Regulation unveils the underlying, root causes of regulatory failure. The result: A compelling and original analysis, broadly suited for a global audience of all backgrounds. Written by published, subject-area experts, the authors carefully delineate how U.S. corporate governance regulation, beginning with Sarbanes Oxley, lacks an adequate rational basis, as may be attributed to a non-existent policy dialogue The witnessed result: A conspicuous lack of regulatory efficacy, enormous costs, coupled with paltry benefits The focus is upon reigniting a stalled, non-productive policy dialogue, by eschewing stale, overly-polemicized arguments, as needed to develop a common ground Drawing from an eclectic, analytic framework, governance experts Nicholas Vakkur and Zulma Herrera offer both the professional and global citizen alike a multi-dimensional understanding of issues critical to global economic health. Nuanced and persuasively argued, Corporate Governance Regulation represents a formidable catalyst in the elusive, ongoing quest for global economic stability.

Why U.S. corporate governance regulation has lost its way, andwhat must be done to improve itModern history persuasively demonstrates the inexorable linkthat binds comprehensive regulation to the global economy. Thisimportant book, rather than simply recount a litany of corporategovernance failures, persuasively explains why, despitepolicymakers' best intentions, regulation has failed in the modernera. An objective study intended for a diverse readership,Corporate Governance Regulation unveils the underlying, rootcauses of regulatory failure. The result: A compelling and originalanalysis, broadly suited for a global audience of allbackgrounds.* Written by published, subject-area experts, the authorscarefully delineate how U.S. corporate governance regulation,beginning with Sarbanes Oxley, lacks an adequate rational basis, asmay be attributed to a non-existent policy dialogue* The witnessed result: A conspicuous lack of regulatoryefficacy, enormous costs, coupled with paltry benefits* The focus is upon reigniting a stalled, non-productive policydialogue, by eschewing stale, overly-polemicized arguments, asneeded to develop a common groundDrawing from an eclectic, analytic framework, governance expertsNicholas Vakkur and Zulma Herrera offer both the professional andglobal citizen alike a multi-dimensional understanding of issuescritical to global economic health. Nuanced and persuasivelyargued, Corporate Governance Regulation represents aformidable catalyst in the elusive, ongoing quest for globaleconomic stability.

Preface ixIntroduction xiiiCHAPTER 1 Virtue Lost 1Introduction 1Methodology 4Methodological Limitations 4The Modern Corporation and Virtue 5The Policy Framework 26Conclusions 41CHAPTER 2 An Introduction to WorldCom: A Policy Primer47Introduction 47WorldCom 48The Source of Conflict 50Rules versus Laws 51The Case for Intentionality 53Regulatory Contribution 55WorldCom as a Basis for the Sarbanes-Oxley Act 56CHAPTER 3 The Enactment Process 59Introduction 59The Enactment Process 62The Law's Effects 69Current Arguments in Favor of the Sarbanes-Oxley Act 75Institutional Precedents 78CHAPTER 4 CEO Perception 81Summary 81Introduction 81Summary of Relevant Literature 82Survey 83Results 84Discussion 88Appendix to Chapter 4 89CHAPTER 5 Sarbanes-Oxley's Effect on Investor Risk97Summary 97Introduction 98Extending CAPM 99Hypotheses 100Evaluation of Risk 102Estimation and Results 105Discussion 114CHAPTER 6 An Audit of Sarbanes-Oxley 125Introduction 125A Conceptual Foundation 126Internal Controls 128The Audit Framework 130Effect on Unintentional Sources of Error 134Effect on Corporate Malfeasance 138Conclusions 146CHAPTER 7 The Underlying Vision 149Econometrics in Policy Analysis 149A Model Predicated on ''Unobservables''151Conclusions 165CHAPTER 8 The Argument for Accountability 169Introduction 169Professional Liability 170Policy Misuse 172The Case for Culpability 174The Improbability of Accountability 177Conclusions 180CHAPTER 9 Why Sarbanes-Oxley? 183Introduction 183Methodology 186The Port Huron Statement 190Why Sarbanes-Oxley? 202Notes 205About the Authors 263Index 265