The Sarbanes-Oxley Act shook the corporate world beyond US borders more than Enron shook the corporate world within them. This Article goes beyond the prodigious commentary on the Act itself to understand the nature of its reception outside the US.
It first develops a hubs-and-spokes account of global corporate life in which corporate purpose, which varies around the world, forms the hub and radiates spokes constituting governance, finance, accounting, and auditing - all of which also differ around the world. Using this model, the Article suggests that non-US receptions to the Act exhibited unfounded fear that the exportation of US norms concerning the spokes of corporate life could redefine corporate conceptions of the hub, corporate purpose. It also shows the fallacy in the no-scandal-here argument emanating from countries around the world.
Although global reactions to the Act may therefore have been somewhat overstated, the Act certainly carried a whiff of exporting US corporate norms around the world by fiat. A key lesson for the US is the next time US corporate scandals erupt and Congress adopts a legislative response, it should automatically exempt non-US issuers pending SEC determinations of the necessity of applying the reforms to them.
A related implication of this model and interpretation concerns debate over whether corporate life around the world is converging to a single model or remaining path dependent and varied. Moves like SOX seem to change the character of both the debate and the direction of evolving corporate life. The normative payoff contends that the superior road to harmonious corporate life is in developing comity rather than hoping for convergence.
Lawrence A. Cunningham, From Convergence to Comity in Corporate Law: Lessons from the Inauspicious Case of SOX in International Journal of Disclosure and Governance (Henry Stewart Publications, 2004)