The Mirrored Ball - Emmitt, the Democrats and Sarbanes-Oxley
An A.C. Nielsen television ratings report says more than 20 million people watched Emmitt Smith, the NFL’s all-time leading rusher and three-time Super Bowl champion, samba his way to claim “the mirrored ball,” the first-place trophy in ABC-TV’s hit reality show, Dancing With the Stars. “You don’t get into a competition unless you think you can win,” Smith told AP Radio after the dance finale.
Entrepreneurs, too, get into the game of running a business believing they will win, just as every politician believes he or she will win in politics. But in the often bloody competitions of business and politics, there is no mirrored ball. Instead, there’s the crystal ball you look into every day with questions about decisions you made—or are about to make—and the future those decisions might bring.
On the morning of Nov. 7, voters across America’s fractured political landscape looked into the nation’s crystal ball and shattered the image they saw. Its replacement, for the most part, bears the colors of the Democratic Party. It is an image that gives entrepreneurs high hopes that one of the most detested pieces of legislation of our time, the Sarbanes-Oxley Act of 2002, will be scaled back.
Named after its bipartisan sponsors, Sen. Paul Sarbanes and Rep. Michael G. Oxley, the law was hustled through Congress in a show of reining in shoddy corporate governance, accounting abuses and outright greed that took down some of the country’s mightiest corporate entities—Enron Corp., Tyco International Ltd. and WorldCom (now MCI Inc.). Its object—to make corporate governance more rigorous, financial practices more transparent and management potentially criminally liable for lapses—was commendable. However, its complex and often confusing mandates placed a compliance burden on companies far greater than expected.
“Billions of dollars and thousands of man-hours have been spent by entrepreneurs and employees complying with burdensome mandates that are often counterproductive for shareholders,” says John Berlau, director of the Competitive Enterprise Institute’s Center for Entrepreneurship. Reform of Sarbanes-Oxley was a winning issue for Democratic and Republican candidates in the election of 2006, the Center says, noting that none of the 25 GOP sponsors of the COMPETE Act of 2006, which would scale back Sarbanes-Oxley’s most onerous provisions, suffered defeat. While GOP leaders said no legislative changes were necessary, Democrats from the beginning of the election season advocated broad legislative efforts to lighten the burdens of Sarbanes-Oxley.
An April 2006 Harvard Business Review article by Steve Wagner, Deloitte & Touche L.L.P., and Lee Dittmar, Deloitte Consulting L.L.P., “The Unexpected Benefits of Sarbanes-Oxley,” cites positive outcomes of Sarbanes-Oxley, such as a strengthened control environment and more reliable documentation. Not good enough, says Berlau. “The returns are in and Sarbanes-Oxley overhaul is a winner.”
Collectively and individually, may we sustain the jubilation and light of Emmitt Smith’s mirrored ball throughout the holidays and year ahead.