Document Type
Article
Publication Date
11-1-2004
Abstract
In July 2002, Congress passed the Sarbanes-Oxley Act, which mandated that public corporations substantially change their corporate governance practices. Sarbanes-Oxley was the result of egregious practice of corporations, directors, officers, and advisors, which resulted in billions of investor dollars being misappropriated and lost. Substantial corporate resources are being expended to comply with the intended (statutory) consequences of the Act. Within the framework of stockholder theory, the historic CEO-centric model of governance is being replaced by the independent director-centric model (post Sarbanes-Oxley). As a consequence of Sarbanes-Oxley, its foundational requirement of agency theory application advances an adversarial model of distrust. The theory of trust will help frame the board and CEO dilemma of acting cohesively as the roles and responsibilities of the board and CEO are transforming. Within trust, the concept of high trust/high distrust depicts a practice model that could evolve as a result of the Act. The board and management must continue to focus their collective efforts for the benefit of the shareholders who have entrusted them with their financial well-being.
Keywords
corporate governance, Sarbanes-Oxley Act of 2002, corporate governance, agency theory, high trust/high distrust, CEO – centric, independent director – centric, regulatory pyramid
Rights
© The Author(s). Kelvin Smith Library provides access for non-commercial, personal, or research use only. All other use, including but not limited to commercial or scholarly reproductions, redistribution, publication or transmission, whether by electronic means or otherwise, without prior written permission is strictly prohibited.
Department/Center
Design & Innovation
Recommended Citation
Ettner, Larry W., "Corporate Governance in the Era of Sarbanes-Oxley" (2004). Student Scholarship. 147.
https://commons.case.edu/studentworks/147