About | HeinOnline Law Journal Library | HeinOnline Law Journal Library | HeinOnline
LOG IN
LOG IN

2004 Mich. St. L. Rev. 279 (2004)
Sarbox: The Road to Nirvana

handle is hein.journals/mslr2004 and id is 289 raw text is: SARBOX: THE ROAD TO NIRVANA Larry E. Ribstein 2004 MICH. ST. L. REv. 279 TABLE OF CONTENTS INTRODUCTION ............................................ 279 I. MARKET FAILURE: AGENCY COSTS, FRAUD AND A BUBBLE ....... 280 A . Agency Costs ...................................... 280 B . The Bubble ....................................... 281 C. Gatekeeper Failure .................................. 282 II. THE REGULATORY RESPONSE .............................. 282 III. REGULATORY COSTS AND BENEFITS ........................ 284 A. The Incentives of Corporate Executives ................. 284 B. Internal M onitoring ................................. 285 C. Gatekeepers ....................................... 287 D . Civil Liability ...................................... 289 E. Securities M arkets .................................. 291 F. Interaction of Regulation and Markets ................... 292 IV. THE POLITICS OF REGULATION ............................. 293 V. THE OPPORTUNITY FOR MARKET SELF-CORRECTION ............ 294 CONCLUSION: TOWARD HUMBLE REGULATION ................. 296 INTRODUCTION It is easy to defend markets when they are functioning well. But what happens when markets malfunction? Then it is just as easy to fall for the Nirvana fallacy - the assumption that regulation will do better. However, this paper summarizes three reasons why this may not be not so. First, the appropriate regulatory course is often unclear, given the uncertain costs and benefits of regulation. Second, even if theoreticians can propose a regulatory solution that seems to work, political realities and the interplay of interest groups often intervene to prevent this solution from being adopted. Third, even if markets have malfunctioned, market actors often are better able than politicians to correct them. * Corman Professor, University of Illinois College of Law. Prepared for Conference, In the Wake of Corporate Reform: One Year in the Life of Sarbanes-Oxley-A Critical Review at Michigan State University, September 19, 2003.

What Is HeinOnline?

HeinOnline is a subscription-based resource containing thousands of academic and legal journals from inception; complete coverage of government documents such as U.S. Statutes at Large, U.S. Code, Federal Register, Code of Federal Regulations, U.S. Reports, and much more. Documents are image-based, fully searchable PDFs with the authority of print combined with the accessibility of a user-friendly and powerful database. For more information, request a quote or trial for your organization below.



Short-term subscription options include 24 hours, 48 hours, or 1 week to HeinOnline.

Purchase Access

Contact us for annual subscription options:

Contact Us

Already a HeinOnline Subscriber?

Log In

profiles profiles most