"Sarbanes-Oxley and the Search For Accountable Corporate Governance." Prepared for presentation at the ESRC/GOVNET Workshop on The Dynamics of Capital Market Governance: Evaluating the Conflicting and Conflating Roles of Compliance, Regulation, Ethics and Accountability, Australian National University, Canberra, AU, 14-15 March 2007
While designed as a politically expedient response to a moral panic fed by media frenzy (Gabilondo, 2006), SOx has brought to the fore fundamental issues about the nature of the modern corporate form that have lain fallow for nearly a century among Anglo American scholars. The debate about the nature of the corporation was preemptively dismissed as mere scholastic banter by no less an authority than John Dewey in 19262 and has only intermittently been revisited.
The argument presented here attempts to reopen those discussions with the intent of reasserting a perspective on the purpose of corporations that allows us to assess corporate governance reforms such as Sarbanes-Oxley. The perspective I put forward is anchored in contention that modern governance – public as well as private -- is at its core based on some form of accountability. Accountability-based governance, in this view, emerged historically as an effective response to the central dilemma facing secular rulers of the embryonic nation-state in the late medieval period – that is, how to maintain and sustain authority over autonomous subjects who were becoming increasingly aware of their capacity for discretionary action. The modern corporate form, I will argue, developed as part of that solution in Anglo-Norman England, and it is in light of those historical roots that contemporary corporate governance and corporate governance reforms efforts should be assessed.