SOX Center

Study finds small firms hit especially hard

A new University of Georgia study finds that the landmark Sarbanes-Oxley Act of 2002 and related rule changes of the major stock exchanges have dramatically altered the makeup of corporate boards, making them larger and more independent. The legislation also had the unintended effect of increasing director pay by more than 50 percent.

“Post Sarbanes-Oxley, the demand for directors by firms is up and the supply is down because the job is harder,” said study co-author Jeff Netter, a finance professor and chair holder in UGA’s Terry College of Business. “So what do you find” Pay is up – pay is way up.”

The Sarbanes-Oxley Act (SOX) was passed with near unanimous Congressional approval following the corporate scandals that brought down companies such as Enron and WorldCom. Among other things, the act and changes imposed by the New York Stock Exchange and Nasdaq sought to enhance corporate governance by promoting board independence and imposing greater responsibility and accountability on board members.

EurekAlert: UGA study finds surge in director pay following landmark Sarbanes-Oxley Act of 2002

Two more UK companies have announced they will delist their shares from the New York stock market to avoid the burden of complying with legislation such as the Sarbanes-Oxley Act.

Both United Utilities and ICI expect to cut their compliance costs by millions of pounds a year by dropping their secondary listings in the US.

Warrington-based United Utilities, which operates electricity and water networks, said today it was running up “significant costs” by complying with the US Securities Exchange Act and Sarbanes-Oxley.

Business Guardian: United Utilities and ICI drop New York listings

Adecco, the world’s biggest temporary employment group, on Wednesday became the latest European company to seek a delisting from the New York Stock Exchange because of limited trading volumes and high costs.

However, the decision is particularly piquant for Adecco, which became the first big European group to fall foul of the intricacies of the US Sarbanes-Oxley legislation in 2004.

Adecco was forced to repeatedly postpone reporting its earnings after the discovery of irregularities in parts of its North American business.

The investigation resulted in the discovery of only minor procedural irregularities, but led to costs of almost €100m for legal, accounting and public relations services – and ultimately led to the departure of John Bowmer as chairman.

msnbc: Adecco to seek NYSE delisting

Attempts to overturn portions of Sarbanes-Oxley may pick up steam this week after an April 4 report showed the value of European stock markets has overtaken U.S. markets for the first time since World War I.

The seismic shift in the value of equity markets is a further blow to the New York Stock Exchange and other U.S. markets, which have seen some of the larger initial public offerings opt for overseas markets instead of their traditional NYSE home.

Critics of SarbOx blame the recent regulation for pushing the IPOs abroad. They claim the legislation makes compliance in the U.S. too costly.

A vast transatlantic stock market emerged on Tuesday when the New York Stock Exchange won control of pan-European market operator Euronext, creating an entity worth 29 billion dollars linking trading platforms in six cities.

The two markets said in a statement that the NYSE had acquired 91.42 percent of Euronext capital and 92.22 percent of the voting rights according to a provisional tally of shareholder acceptances.

The new leviathan, creating the first inter-continental stock market capitalised at about 22 billion euros, will bring markets in New York, Paris, Brussels, Amsterdam and Lisbon under one group and will also include the Liffe financial futures market in London.

A vital point is that companies quoted on each market will continue to operate under existing regulations. European companies will not be affected by severe accounting rules, as stipulated by the Sarbanes-Oxley legislation, which are much criticised in the United States for increasing costs on quoted comapnies.

Yahoo: NYSE buys Euronext, forming first inter-continental stock market

The Asia Tigers Fund, Inc. (NYSE: GRR; the “Fund”) reports to stockholders that its Chief Executive Officer has submitted to the New York Stock Exchange his required annual certification for 2006 and that the Fund has included the certifications of its Chief Executive Officer and Chief Compliance Officer, as required by Section 302 of the Sarbanes-Oxley Act, in the Fund’s Form N-CSR containing the Fund’s annual report for the fiscal year ended October 31, 2006, which was filed with the Securities and Exchange Commission on December 29, 2006. Although the Fund’s annual report did not include this information, these certifications were appropriately filed as required.

Yahoo: Asia Tigers Fund NYSE Certification

The head of the New York Stock Exchange has launched a blistering attack on the lack of regulation surrounding the London Stock Exchange’s junior Aim market.

John Thain, chief executive of the NYSE, criticised the junior market for its lack of corporate governance standards. Mr Thain, speaking at the World Economic Forum in Davos, Switzerland, said he felt Aim “did not have any standards at all and anyone could list”.

Although he believed it was beginning to change its approach, he added that London “had to be careful not to damage its reputation by allowing in companies that are not well run”.

He also said that he felt that neither the LSE’s Official List nor Aim had such a strict approach to corporate governance as his own NYSE or Nasdaq, which is currently trying to buy the LSE. Many in London do not want an American takeover because they fear overly-stringent regulations, such as Sarbanes-Oxley, may be forced to apply to UK-quoted companies.

Telegraph.co.uk: NYSE chief attacks Aim