Kill Sarbanes-Oxley? I hardly knew it!
Kill Sarbanes-Oxley? I hardly knew it!
Categories: Other raves, business, 325 wordsSend feedback •Once again John C. Dvorak is on the wrong side of a rant. In a recent MarketWatch article ("It's time to repeal Sarbanes-Oxley") he loudly proclaims that the business accounting act is killing innovative tech ventures in a mountain of paperwork. In his opinion, that's enough to warrant its death.
While the avalanche may be real, and its effects burdensome, it doesn't necessarily mean the wholesale death of aggressive tech. What I've seen at companies hit hard by S-O is a massive effort undertaken to do something they should have done anyway: streamline their labyrinthine accounting processes and implement/improve robust information management systems. In the end, what started off as an anchor becomes an ironic lifesaver, as costly inefficiencies are rooted out, quashed and replaced by modern systems. I daresay the cost of implementing S-O (estimated at 4% or higher of profit by Dvorak) is easily offset by the eventual productivity gains.
Dvorak goes on to further rationalize his extreme stance by claiming that pre S-O mechanisms handily led to the (late) exposure of Enron malfeasance. But what he neglects to acknowledge is that S-O is largely designed to prevent and illuminate such misdeeds before they reach Enronian levels. Why should we patiently wait until after employees have been robbed of their corporate vestments before being able to see the alarm? Why should we wait until after investors have been completely bamboozled before having a clue? We shouldn't, and answering those very real questions is one of the things that led to S-O in the first place.
I think it's still far too early to call for the heads of Sarbanes and Oxley. Wouldn't it make more sense to investigate further, and see what really comes of it? Besides, the debacle of the 2000 tech bust clearly demonstrates the need for some brakes in that industry, and perhaps this is just the sober dose those innovation-drunk entrepreneurs need as they rush pell-mell down the information highway.
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