In search of Sarbox defenders

Thomas Palley has a blog entry

today entitled "In Defense Of Sarbox". If only it were. In fact, it’s

more of an argument against anti-Sarbox arguments, some of which – Palley

is right – are pretty weak.

On the other hand, Palley comes up pretty short himself in terms of actual

arguments in favor of Sarbox. Is there any evidence that Sarbox has

made the stock market a safer place to invest, or has otherwise improved corporate

governance in the US? Does Sarbox’s rules-based approach to regulation really

have a more beneficial effect than a principles-based approach? Has there even

been the slightest attempt to run some kind of cost-benefit analysis on Sarbox?

If so, has anybody determined that the benefits outweigh the costs?

Sarbox strikes me as a classic "something must be done; this is something;

therefore this must be done" piece of legislation. I understand the reasons

why it was brought into law – but even if those reasons are very good,

that doesn’t mean Sarbox is a very good law. If we can reduce the harmful aspects

of Sarbox – and, by the Law of Unintended Consequences, there are sure

to be some harmful aspects of Sarbox – would that not be a good

thing?